Unfortunately in the Cedar City Real Estate Market there are many people who find themselves in a no win situation with their mortgage company. While it is hard to accept, it can be a reality. There are some things that you may be able to do to get out from under the mortgage on your home. I am talking about not keeping the home. Here are some of things you can opt to do:
Sell the house: This seems overly simplistic, but the reality is that some people find themselves in a position where they cannot afford to make their mortgage payment, but are not upside down in their mortgage. There may be equity in the home, but you just can’t afford to make the mortgage payment.
Selling is by far and away the best option. There may not be enough equity to refinance to an affordable payment, or you may have gotten transferred to a new place for work. Selling the home is the best option.
Assumption: If your mortgage allows it, you may be able to find a borrower that is willing to assume your mortgage and mortgage payment. The new borrower would have to qualify with the mortgage company, and again, many mortgage companies do NOT allow for this option. Check with your mortgage company at the earliest possible time to see if this will be allowed.
Deed in Lieu of Foreclosure: Some mortgage companies will allow you to surrender the house back to the mortgage company instead of completing the foreclosure process. Most mortgage companies will require that your home be listed for sale for at least 90 days before they will accept the Deed in Lieu of foreclosure. This solution may also have tax ramifications for the homeowner. You will want to contact your tax advisor to assess your tax liability on this solution.
Short Sale: Simply put, this is selling the house for less than is owed on it. This will require approval from the mortgage company as well. The mortgage company will require that they approve the sales price and conditions of the purchase contract. This process can really be difficult if there is more than one mortgage on the property. Contact a local Realtor for a complete explanation of the process of a short sale. Here in Cedar City, you can contact either Darcy or me, we will be happy to answer your questions about Short Sales.
Foreclosure: This occurs usually 90 days after you receive a Notice of Default from your mortgage company. The mortgage company exercises their rights to sell the home. I have written another blog that goes into the timelines and process of foreclosure.
Bankruptcy: This is a process that will require you to use an attorney. It is a serious solution, so talk to an attorney prior to considering this option.
It is our advice that you talk to attorney prior to considering any of these steps. Many attorneys will do a free consultation with you, be upfront when you make an appointment, tell them what you want to talk to them about and make sure that it is still will be a free consultation.
As with the Short Sale Option, we are happy to talk to you and explain any of the solutions that I have mentioned here in this post. We are NOT attorneys or accountants, so we can not advise you in those issues, but we are happy to explain the process to you.