Although few home owners think about the
potential of foreclosure when
signing the paperwork for their mortgage, it is a reality that many must face
when money becomes tight. In many instances, selling your home to avoid
foreclosure can be an excellent strategy, especially since the alternative,
which is typically bankruptcy, can leave your credit rating damaged for years.
Consider Alternative Options
In most situations, the only way to generally
avoid foreclosure if missing payments has become imminent is a short sale.
Short sales often end with you losing a significant portion of the money you
have invested into the mortgage, as the only way to attract a buyer in such a
short period of time is to list the property well under the current market
value for similar homes in the area. Some alternatives to this option include
negotiating a lower monthly mortgage payment with your lender or a period where
it is acceptable for no payments to be made, as long as the amount owed is
added on to future payments. Another option is to find a renter who will either
agree to rent the entire home or sublease while you are still living there.
List the Home if its Value is Higher than the
Amount you Owe
A short sale is a tactic which is typically
utilized if the value of the home is lower than the amount currently owed.
However, if the value of the home is higher than the amount you owe, it makes
more financial sense to put it on the market for full price and take your
chances with finding a buyer. According to SFGate, "List the house on the market immediately if the value of
the house is equal to or greater than the balance of your mortgage. If the
value of the house is considerably lower than the amount you owe, you should
speak to your lender about a short sale."
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