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Can I Sell My Home If I’m Behind On My Mortgage?

Sell a House Behind on Mortgage

With the rising cost of living and the increase in interest rates, many people are starting to worry about falling behind on their bills. If you’ve already missed a mortgage payment or have not been able to pay the full amount, things can feel dire. The good news is you’re not trapped and you do have options.

Today, we’ll answer the question “can I sell my home if I’m behind on my mortgage?” and discuss other options you have available to you if you are behind on your mortgage.

What are my options if I’m behind on my mortgage?

If you’re behind on your mortgage, the first and most important thing is to be in contact with your lender. While it is uncomfortable to have to tell someone you’re having financial problems, it’s preferable to getting threatening letters in the mail. Reach out to them (they’ll have a department that deals with this kind of thing day in, day out) and tell them about your situation and ask about your options.

If you believe your situation is temporary, they may be able to work out a temporary payment plan. If that’s not an option for you, you can look into selling your home.

Can I sell my home if I’m behind on my mortgage?

Yes, you can sell your home right up until your lender forecloses on your home. That said, there are a few different factors that can affect the outcome of your selling your home and whether or not you need to ask for permission from your lender to sell.

If Your Home is Worth More Than You Owe

If your home is worth more than your mortgage and you don’t believe you’re going to be able to keep up with your mortgage, selling it can be the easiest and fastest way out of your predicament. As long as your lender is going to get the full amount you owe them back, they will have no quibbles about you selling up and getting out.

For example, if you owe $150,000 on your mortgage but your house will easily sell for $220,000, you can sell the home, pay them the $150,000, and take the $70,000 for yourself, just like any other sale.

You can do this at any time up until the lender forecloses on your home; even if they’re close to foreclosure it’s worth suggesting this option to them. Foreclosure is costly for them as well as being unpleasant for you, so they’ll be interested in any way you plan to pay them back.

If you’ve missed any payments or are on a payment plan, you should tell your lender about your plans to sell your home. If you are still just keeping your head above water, you usually don’t need to ask them for permission.

If Your Home is Worth Less Than You Owe

Things get more tricky if your home is worth less than you owe. This can happen if you bought at a time when the market was particularly buoyant and you’ve now got into financial trouble when the market has dipped. It can also occur if your home is no longer worth what you bought it for, such as after a disaster or something out of your control has bought the value down.

Selling a home that’s “underwater”, meaning it is worth less than the mortgage owed on it, is possible. However, it’s not going to be as straightforward as selling a home that’s worth more than the mortgage owed.

Selling a home that’s underwater is known as a short sale.

In a short sale, you need to explain the situation to your lender and ask them for permission to sell. If you don’t ask for permission to sell, they may chase you for the additional money you owe. For example, if you sold your home for $100,000 when you owed $130,000, you would still owe them $30,000. In a short sale, they agree to dismiss the $30,000, meaning they lose that money.

To find out more about selling your home as a short sale, click here.

How to Sell Your Home if You’re Behind on Your Mortgage

Once you’ve decided to sell and have told your lender (if necessary), your next step is to put your home on the market. If you’ve talked to your lender, they will have likely given you a certain number of months to sell your home before they will move forward with foreclosure.

You’ll usually have 3 options:

  • Sell your home via a realtor
  • Sell your home via auction
  • Sell to a cash buyer

Selling via a realtor is the most “traditional” way to sell your home but rarely the fastest unless your home is highly desirable. You will get the most money for your property this way, but you’ll also have to pay realtor fees, which are 2-5% of the sale price in Massachusetts.

Selling your home via an auction isn’t as fast as you may have been led to believe, and is rarely the right option for homeowners. If you want to find out more about selling at auction, click here.

Selling to a cash buyer is by far the fastest way to sell, so if you’re in a hurry to get out of your current situation, it will likely be the best option for you. This is where you sell to an investor who can buy your home in cash and close in as little as just a few weeks.

Sell Your Home When You’re Behind on Your Mortgage

If you live in Massachusetts, are behind on your mortgage, and are ready to sell your home as soon as possible, we’re here to help. We buy homes for cash in Massachusetts in as-is condition, meaning you don’t need to prep your house for sale or make any major repairs just to make a potential buyer happy.

All you need to do is contact us with a few details of your home and we’ll send you our best cash offer. If you like it you can accept and we’ll get the ball rolling. To find out more or to get a cash offer for your home, click here.

Learn how to sell your house fast without a real estate agent...

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