Hey everyone, I’m in a bit of a tough spot. My house has been on the market for around 120 days now and honestly, there’s been very little interest. I had one offer, but they backed out just days before closing, and since then, not much action. I did lower the price by about 10% after it appraised for asking, but still nothing. I’m officially behind on two mortgage payments and the house has been vacant for about four months. I’m really considering asking the mortgage company to foreclose on it immediately. I owe about 20k less than it’s worth, so I don’t think I’ll get hit too hard there. Plus, I really don’t need a mortgage or car loan for the foreseeable future. I’m just worried that if I tell the mortgage company I can’t pay, they might sue me or something rather than just foreclose. What are the implications of this? I’ve decided against filing Chapter 13 since I really don’t want the house and I’m not expecting to make any money from the sale.
What you want to ask for is a deed in lieu of foreclosure. This means you’re saying, I can’t do this, and you won’t make them foreclose. You negotiate a possession date and hand over the keys. It’s much less damaging to your credit but still hits a bit.
@Zyler
Thanks for the tip! I’ll definitely check that out.
Have you lowered the price to your absolute break-even point where you owe no funds at closing? If you have, then a deed in lieu is probably your best bet. A short sale can take longer and requires significant approval.
@Oak
Yeah, I’ve pretty much hit rock bottom on the price. If it goes any lower, I’ll need cash at closing, which I can’t do unless I skip paying an agent. Then I’d have 20k to play with.
If you have a VA, USDA, or FHA loan, you might be able to have someone else assume your mortgage. They’d need to qualify through your mortgage, but it could work out. Subtract what you’re selling your house for from what’s left on your loan. That might be the down payment you can ask for from the buyer. The mortgage company should provide a form that releases you from liability if the new buyer misses a payment.
@TonyBrown
That’s interesting… I hadn’t thought about that. What if I don’t have those types of loans?
Hadden said:
@TonyBrown
That’s interesting… I hadn’t thought about that. What if I don’t have those types of loans?
In that case, you might have to stick with the other options like deed in lieu or short sale. Just depends on your situation.
I went through something similar. My mortgage went up drastically, and I couldn’t keep up. I tried deed in lieu, but they weren’t interested. Ended up not paying and they foreclosed. My credit took a huge hit, but I rebuilt it in time. It’s not the end of the world, trust me.
@Micah
That sounds rough… I guess it helps to know that others have been through it and made it out okay.
No, you should first ask for a short sale. This means the bank approves you to sell for less than you owe. I hope your agent knows how to handle that.
Jem said:
No, you should first ask for a short sale. This means the bank approves you to sell for less than you owe. I hope your agent knows how to handle that.
I’m not sure I want to go that route… seems like there’s a lot of red tape. I really just need a quick end to this.
You could call loss mitigation to ask for short sale approval. Then you can lower the price to attract more buyers. The bank would take the loss, and you wouldn’t have to pay fees at closing. You can also stay in your house longer than with a deed in lieu and not have to pay your mortgage during the process.
@Daniel
That’s a solid plan… I might reach out for that. Thanks for the info!