It can happen to anyone, a major medical event, suffering the loss of a job or dual-income can quickly cause you to fall behind on your bills. Get behind on your mortgage payments, and you can quickly go into foreclosure. You may be thinking that selling your house is your only apparent solution to catch up. But can you sell your home when behind on mortgage payments in Louisville?
The answer is yes- as long as you’re not so far behind that, you’re officially in foreclosure. Let’s take a look at what your next steps should be when you’re behind on your mortgage payments and considering selling your house.
Selling Your House If You’re Behind On Mortgage Payments?
What to Do When Falling Behind on Mortgage Payments
If you’re behind on house payments, usually your lender has reached out to you either by mail or phone or both. You shouldn’t ignore those letters or messages. When you’re falling behind on mortgage payments, it’s important to keep the lines of communication open with your lender.
What happens when you’re behind on house payments, your loan goes into default, and foreclosure can occur after you default—but it doesn’t usually happen immediately. Your lender sees you’re behind on mortgage payments and need help. Your mortgage lender does want to work with you to keep your house and avoid foreclosure. Legally in Kentucky, you typically get 120 days to try to find a way to avoid foreclosure before the process can start. Some of the mortgage companies solutions they offer homeowners include:
- Repayment Plans
A repayment plan adds past due amounts to your mortgage payment to be repaid for however many months it takes to bring the mortgage up to date. This plan gives you time to catch up on late payments without having to come up with a big lump sum payment. This is one solution when you’re behind on mortgage payments and need help.
- Forbearance Plans
This type of plan allows you to make either reduced mortgage payments or no mortgage payments until your financial situation improves. Forbearance is usually given if you have a temporary or short term financial difficulty. After the forbearance period, you will be expected to pay any missed payments or amounts, which is generally paid with a repayment plan or modification. Solution number two when you’re behind on mortgage payments and want help.
- Short Sale
Selling your property in a short sale is a foreclosure alternative. You would sell your house for less than the balance remaining on the mortgage. By selling the home, you could pay off a portion of the mortgage balance with the profits. Keep in mind that you may be asked to pay off the remaining balance of the mortgage. The perk of a short sale is that it helps you transition out of your home without going through Kentucky foreclosure. More will be explained about short sales below.
- Deed In Lieu of Foreclosure
This alternative is where you would voluntarily hand over the property ownership to the mortgage owner in exchange for relinquishing the mortgage loan and payments. However, something to note is that you may need to pay off the remaining balance of the mortgage if the property’s value is lower than the outstanding amount. This option also allows you to relocate from the home without going through the Kentucky foreclosure process.
Each option has its pros and cons. Ideally, staying in your home sounds wonderful, but other financial things may have to change for you to do that and not get behind on mortgage payments in Louisville again. Staying in your current house may require you to be on a tight budget and even take on a second job- which can make the idea of selling your home sound like a great idea.
Can You Sell a House When Behind On Mortgage Payments in Louisville?
Yes, you absolutely can sell your house when you’re falling behind on mortgage payments. Like mentioned earlier, your mortgage lender has probably reached out to you about your past-due house payments. It’s important to let them know what you plan to do next- sell your house.
Explaining to the lender what you plan to do to pay them back (selling your home) may lead to them allowing you a little extra time to sell your house before initiating the foreclosure process. While your place is for sale, make sure to periodically update the mortgage company on your progress of finding a buyer.
How Should You Sell a Home You’re Behind on House Payments?
There are a few ways you can go about selling your home, but remember, time is of the essence right now. Here are some ways you can go about selling your house:
- Sell with a real estate agent
- Sell by owner
- Short sale
- Sell to a local homebuyer
Each option does have its pros and cons. Let’s take a look at these a bit closer to decide which option is best for you.
Sell With a Real Estate Agent
Hiring a real estate agent to sell your property isn’t a bad idea, especially if your agent handles all aspects of the home sale. A realtor’s job is to come up with a reasonable asking price, list it, develop a marketing strategy, execute the marketing plan, show the home, host open houses, negotiate, handle the paperwork, and phone calls, to name a few responsibilities. If you plan to use this traditional way to sell your home, remember that you will likely need to make repairs to your house before listing it. Fixing major repairs is an essential step in selling your property.
Typically traditional buyers use bank financing to purchase a home. When they do, the bank usually requires verification that the house is in good condition before lending a family money to buy it. If your home needs significant repairs or has foundation damage, a home inspection required by the bank will catch these issues inside your home. You will need to fix them before selling- which can be a challenge financially, especially since you’ve been falling behind on mortgage payments. Depending on what all needs to be repaired, this could end up costing you a lot of money, money that you may not have right now.
Something else to keep in mind when using an agent to sell your home is their commission. Make sure to account for 5-6% of the sale price of your home to go towards paying your real estate agent. So if you sell a Louisville house for $300,000, you will be paying between $15,000 to $18,000 in commissions.
And the biggest thing to remember in all this is that selling with an agent doesn’t guarantee a quick home sell, which is really important right now since you are behind on mortgage payments in Louisville and want to avoid foreclosure.
Sell By Owner
Once you hear how much it could cost you to sell with an agent, you probably think selling by owner is a great alternative but is it really? Remember all those responsibilities mentioned above that an agent handles, those will fall to you to handle instead when you sell your house by owner.
And don’t forget repairs will still be necessary to sell your property by owner as well. So though you may save some money on realtor fees, you will be paying for it with your time and still won’t have any relief with the cost of repairs.
If you were to sell your home in a short sale, you either would use an agent or sell by owner. Unlike its name, selling your house in a short sale can actually be a long process and isn’t short at all. When you sell your house this way, you will sell your house for less than the balance remaining on the mortgage. Once the home does sell, you may be able to pay off a portion of the mortgage balance with the profits but still could be asked to pay off the remaining balance.
Something else to remember is that any offer that comes in during a short sale has to be approved by the lender. Meaning you are not the one to accept offers by potential buyers, the bank is the one to approve the offer and decide who purchases your home. This could take months before determining an acceptable offer causing you to be tied to that house even longer.
Sell to a Local Home buyer
The final option you have is to work with a local home buyer in your area like Time Worthy Property Solutions to purchase your home with cash and buy it in as-is condition. This is a great solution when you’re behind on mortgage payments in Louisville.
Firstly home buyers buy houses in as-is condition, solving the problem of making costly home repairs. Secondly, when you work with a cash buyer, they can close on your house in as little as 7 days. Because they pay in cash, they don’t have to get bank approval or wait on bank financing to purchase your home. Alleviating months of uncertainty. The last thing to mention is that since you would be working directly with your buyer, there are no realtor fees, and they would even help pay closing costs.
Selling your property to a local home buyer can solve many problems you may face when falling behind on mortgage payments.
If you’re interested in working with a local home buyer in Louisville, contact Time Worthy Property Solutions today. Time Worthy Property Solutions is a local family-owned property buyer that wants to help homeowners in unique situations sell their homes even when you’re behind on house payments.