According to the Mortgage Bankers Association, there are currently 2.2 million homes in the U.S. that are in forbearance. Homeowners like you can take advantage of the ongoing seller’s market and reap the financial rewards that come with selling – even if your home is in forbearance. The process is simple, and it can be an excellent choice if you want a fresh start or wish to avoid foreclosure by purchasing a more affordable home. Read on to learn how you can quickly and efficiently sell your home, even if it’s in forbearance.
What is Forbearance?
Forbearance is a status lenders can grant borrowers who seek to defer their mortgage payments. A common reason for this is if the borrower can no longer pay their mortgage on time. This can happen for a variety of reasons, some of which include:
- Sudden death in the family
- Chronic or acute illness
- Loss of employment
- Loss of benefits
- Sudden or unexpected financial obligations
Forbearance is not automatically granted and must be requested by the mortgage holder. It is recommended that if homeowners need this service that they request it as soon as possible to avoid being sent to collections. Homeowners will not need to show proof of hardship thanks to provisions passed in the CARES Act. It is important to note that forbearance is not debt forgiveness, and prior missed payments will need to be repaid.
Your forbearance agreement is not considered enacted or complete without a signed contract signed and sent by the lender, returned, and approved by all parties. If you have any questions about where your case stands in the request process, please be sure to contact your lender for information.
Foreclosure is separate from forbearance and requires the lender to serve you with a notice of default. You are at risk of being served a notice of default if you have not paid your mortgage over a set period of time, which can vary depending on your lender and your circumstances. Generally, the timeframe for risk of default and further actions of foreclosure is 30-45 days.
Selling your home in forbearance is almost always preferable to simply defaulting and having the lender proceed with the foreclosure process.
How Long Does It Take To Sell a Home?
According to the National Association of Realtors, the average time that your home will be on the market, once listed, is approximately 24 days. The actual process of loan transfer and closing can range from 1-2 months, which means that the process of selling your home from start to finish is not likely to last longer than four months.
This is great news for homeowners that are working to sell their home and pursue their next adventure – and with a trusted realtor to assist, the process of selling your home can be even faster.
First, you must begin to get your home ready for presentation and listing with your agent. Your agent may wish to walk through the home with you, virtually or in person. This helps them assess any potentially problematic areas of the house and create a plan with you to address or fix parts of your home in order to get a higher listing price. Some common pre-listing activities include:
- De-cluttering the home and surrounding outside areas
- Simple home fixes and updates, such as new light switch covers or fresh paint jobs
- Home decor suggestions
- Addressing unfinished areas of the home that could deter buyers
You may choose to undergo a pre-listing inspection depending on your situation.
After you complete the preparation for the listing process, you will then work with your agent to set the price and introduce your home to the market for evaluation from buyers. Buyers can then start submitting offers. When an offer is accepted, you can work with both the bank and the agent to complete any needed paperwork and take the necessary steps to complete the sale.
How Can I Sell My Home in Forbearance?
The process of a home sale, while the payee is currently in forbearance, is relatively simple. Before going through the process, homeowners should be aware that the simple act of selling the home does not erase outstanding debts. Any remaining debt that has been accumulated or deferred while in forbearance will be taken out of any proceeds you get from the sale of the home.
Depending on the homeowner’s financial situation and the amount in forbearance, selling can be a beneficial financial decision that allows a homeowner the chance to start fresh in a more affordable home and location.
After the evaluation is complete, the home sale process does not differ from a regular sale – and the homeowner can work with the lender to resolve any unpaid debts after the sale is finalized. There may be less emphasis on the pre-listing inspection or home upgrades. This is because sales under forbearance are often made quickly so that the seller can resolve any outstanding debts in a timely manner. You can work with your realtor and lender to resolve any uncompleted tasks, such as home inspections or other pre-listing necessities that are needed.
Your lender will have information on what paperwork you will need for this process and will depend on the type of loan you’ve taken.
You may also want to consider selling your home directly to an investor for a cash price. Private investors are plentiful as the market continues to boom, and more people seek to use real estate as an investment opportunity. As in the case of a regular home sale, you will need to pay off any outstanding debts to the lender.
Selling Your Home Doesn’t Have to Be Difficult
Whether you are wondering if you can sell your home in forbearance or wanting to sell your home for a new adventure, the real estate experts at Pavel Buys Houses are here to help. We buy houses all over Massachusetts in any condition and pay cash while offering lightning fast closings! If you need to sell your home quickly without hassles, we would love to chat with you. Please give us a call at 781-309-7085 – or contact us by clicking here.