Can I Sell My House with Mortgage Arrears?

If you are behind on your mortgage payments and wondering if you are able to sell your house, the answer is yes.  Having your mortgage in arrears is certainly a stressful situation, and selling the property may be the best option. It is possible to sell a house with a mortgage in arrears, but there are some important factors to consider and steps to take:

Contact your mortgage lender: Notify your lender about your intention to sell the house. Discuss your situation, including the arrears, and see if they are willing to work out a solution or repayment plan. They may also provide you with information on any potential penalties or fees associated with selling the property while in arrears.

Every state is different. Some states are mortgage states and other states are deed of trust states. Without getting too complicated, it has to do with how title is conveyed on your property. The point is depending how many months in arrears you are and what type of state you are in, you may need to contact the bank’s attorney for information.

If the foreclosure process has been started, the lender won’t be able to assist you, you must go through the lender’s attorney. There are usually two quotes they will give you, the payoff to bring the account current and stop the foreclosure process, and the total amount to payoff the entire loan. If you are trying to sell your house, you’ll want to make sure you can sell it for enough to pay off the entire loan, after fees, unless you are having someone take over your payments.

Engage a real estate professional: If your house is in a condition to sell and you have time, then you can hire a qualified real estate agent experienced in handling properties with arrears. They can guide you through the process, help you set a competitive price, and attract potential buyers.

If you don’t have a lot of time or the house has deferred maintenance that needs to be addressed, then you may have to seek an investor or cash buyer. They will typically take on projects more so than a typical home buyer.

Determine the property value: Assess the market value of your property to determine an appropriate listing price. Consider hiring a professional appraiser to provide an accurate valuation. You’ll want to consider the square footage, lot size, bedrooms, bathrooms, and condition of the property when determining the value. You can then compare it to other recently sold homes near your home with similar attributes.

Communicate with potential buyers: Disclose the mortgage arrears to potential buyers, as it is essential to be transparent about the financial situation of the property. Some buyers may be willing to take on the arrears, while others may not. Depending on how much time you have, you may have to work with a cash buyer or someone who is willing to take over your payments.

Pay off the arrears: If possible, try to resolve the mortgage arrears before selling the house. This will ensure a smoother sale process and may make the property more appealing to buyers. If you are in a position to settle the arrears before selling, it will buy you some time to get your house on the market and sold.

Can I Sell My House with Mortgage Arrears?

Negotiate with the lender: If you cannot pay off the arrears before selling, negotiate with the lender to establish a plan for repaying the outstanding amount from the proceeds of the sale. This negotiation may involve discussions on how the arrears will be addressed, any penalties or fees, and the release of the mortgage lien.

Proceed with the sale: Once you have reached an agreement with the lender and found a buyer, proceed with the sale process. Ensure that all necessary legal and financial documentation is properly prepared and signed. If you are working with a cash buyer or investor, then you’ll want to make sure the title attorney is familiar with that process.

It’s important to note that the specific process may vary depending on your location and the terms of your mortgage agreement. Consulting with a real estate professional and seeking legal advice can provide you with accurate and up-to-date information based on your specific circumstances.

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