How to Sell Your House While in Mortgage Forbearance
Mortgage forbearance options and foreclosure moratoriums have saved a lot of homeowners during the coronavirus pandemic. Unfortunately, it’s been a very tough year for many Americans. Forbearance has allowed borrowers to suspend mortgage payments temporarily. However, it does not mean these bills won’t ultimately have to be paid. Depending on your forbearance plan, your back payments can build up on you and still leave you in a tough situation once you have to start paying again.
Pay Your Mortgage if You Can
If you can afford to make your mortgage payments, it’s best not to go into forbearance. Many homeowners took forbearance options just because they could, but there really is no long-term advantage if you can afford to make your normal monthly mortgage payments. If you are currently in forbearance and unsure of your financial future, you may want to consider selling your house while you can.
Why You Should Consider Selling
This is especially true if you are still in a good position in terms of your equity. You may be behind on mortgage payments or putting them off because of forbearance, but you owe less than the property is worth in today’s market. That means there is profit to be made with a successful home sale. Even if you only break even, selling your house may be the right move for you and your family.
It is a seller’s market right now and that’s good news for those in a position to sell and move onto something else more affordable. You won’t have to worry about making up those missed mortgage payments skipped while in forbearance. The bank will get a lump sum at the closure of the sale that will cover whatever you owe. Anything leftover will come to you as cash—of course after the lender is paid off and any selling fees, real estate agent commissions and closing costs are covered.
House Selling Options While in Forbearance
How you sell is up to you. If you have time to get the house ready (or if you have been keeping it in good shape this whole time), you can list it on the open market. You can go through a Realtor® or sell it yourself (“For Sale By Owner”) to save on some of those agent/broker fees and commissions. Just understand that this process will take some more time. You want to get the house ready for the open market, which may mean making repairs, adding a fresh coat of paint and other upgrades to maximize its curb appeal and ultimate resale value. Then, you will list the property, review buyer offers and eventually go through the final closing (escrow) process. On average, most traditional home sales will take between 2-6 months depending on various factors.
Work with a Real Estate Investor
Another option is to sell or lease your property to a real estate investor who will pay cash for your house or be willing to work out a creative financing option that benefits both parties. The advantages here are that a cash sale will close much quicker than a traditional sale. We’re talking weeks rather than months! Investors are willing to buy houses in as-is condition, so that can save you time and money on repairs and clean-up. As for financing options, there are a number of ways to transfer your property depending on your ownership situation (how much you still owe versus what the home is worth). Even if you are technically upside-down on your mortgage and forbearance has put you even further behind, you may still have selling and financing options that will get you out of a bad housing situation. You might come out ahead, break even or at least minimize the damage to your credit score and overall financial standing. It may be time to cut your losses and get out from under your mortgage debt as much as possible.
Foreclosure moratorium and mortgage forbearance options have been temporary life-savers for many American homeowners, but they will not last forever. It is important to use this time to research your options and make smart decisions for your financial future. Whether that means selling now or riding it out, only you can decide what’s best.
If you would like to get a no-obligation cash offer on your house or talk to someone about your selling and seller financing options, fill out the PropertyLark contact form. Provide us with some basic information and we’ll get back to you with our offer or best selling/leasing recommendations. We’re here to help you when you need us!