When you are facing foreclosure and you have tried everything to save your home, but you still can’t find a way to keep your home, you may want to consider selling your home. It’s unfortunate, but sometimes you have to step back and think about what is best for you and your family. Losing your home may be hard, but the stress hanging on to something that will eventually be taken away is even worse.
Don’t get me wrong if you want to keep your home and if there is still hope, I think you should fight for your house as long as possible. But I don’t think it’s smart to still be there when the sheriff shows up with a moving crew to throw all your belonging out into the street and change the locks. There are a limited number of ways to save a home from foreclosure and once you’ve tried all of them, and failed, then it may be time to move on and consider your other options.
First of all, selling the home yourself, or through a Realtor is always your best option. If you can sell the home and pay off all the mortgages and liens, you will be allowed to keep any additional income that is gained from the sale of the home. Selling your home and leaving with your equity is a much better option than losing all your equity and having the sheriff forcefully remove you from the property; but that’s that only my opinion. Many lenders will even give you extra time if your home is listed with a Realtor. Contact your lender and explain that you have tried everything else and now you would like them to give you time to sell the house. It can’t hurt to ask, and many lenders would rather see you try and sell the house on your own, rather than go through with the foreclosure, sheriff’s sale, eviction, and redemption process.
If you have already tried to sell your home through conventional methods, it may be time to think about a “short sale”, or “deed in lieu of foreclosure”. A short sale is when the lender accepts a payoff for less than what is owed on the loan. A lender will generally approve a short sale when a home has decreased in value and more money is owed than the home is worth. Example: If you purchased your home with a loan for $300,000 one year ago and today your home is only worth $275,000, then your bank should approve a short sale, or even a short payoff for $275,000 (maybe less). In many cases, lenders will automatically approve a short sale regardless of the value of the home, because they are willing to accept a certain amount of loss in a foreclosure situation. In order for your lender to accept a short sale offer, you will need to provide them with the following items:
1. Hardship letter
2. Proof of income (paystubs, tax returns, etc…)
3. Listing agreement (this shows them that you tried to sell the home at market value)
4. Purchase offer/contract
5. Financing approval letter
6. HUD Statement from the purchaser, showing dispursment of the funds
In a short sale transaction, you as the home owner must be willing to walk away with nothing. Rules of a short sale specifically state that you are not allowed to benefit financially from a short sale. You must also remember, any discount the lender give you is consider income for you. Example: If you payoff is $100,000 and your lender agrees to a $75,000 short sale amount, the difference of $25,000 is added to your income for tax purposes. Which means you’ll owe the IRS additional money at the end of the year.
If you would like to find out if your home is qualified for a short sale, or if you would like to know if you qualify for other methods of keeping your home, please complete our evaluation form and we will provide you with the free help you need to save your home today. We will also send you are free e-book, which will help you learn more about the foreclosure process, the sheriff’s sale process, and the eviction process.