Should I Sell My House to Avoid Foreclosure?

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."