Escaping an Upside-Down Mortgage

by | Oct 17, 2019

If there is one thing that is constant in this life, it’s changed. Sometimes, change comes at you very fast, too. 

When these shifts are unexpected, even unwanted, your life can be thrown into emotional and financial chaos. And, the ramifications are often felt everywhere.

The death of a spouse, the loss of your southern California job, or a diagnosis that requires treatment your health insurance won’t cover can all lead to confusion, a sense of betrayal, and doubt that everything will turn out okay—as well as debt that quickly becomes debilitating.

The inability to make your mortgage payments can just add insult to injury, too, particularly when you owe more money on the loan than your home is currently worth.

How can you escape an upside-down mortgage and come out financially intact, especially when the rest of your life has turned upside down, too?

Getting Out from Under an Upside-Down Mortgage

Even when you’ve simply fallen behind on paying for your home because of other distractions, like finishing up grad school, selling a house after the death of a parent, or starting your own business, the complications that arise still sting.

It’s hard to get back on track and out of debt. Learning that you’re upside down on your mortgage when it looked like selling your home could be an easy solution to solving your financial troubles can take more wind out of your sails. 

It’s nothing to be ashamed of. We never really know which direction our decisions will take us, whether things will turn out as good as we hoped or worse than we could have possibly expected. All you can do at this moment is to move forward. And, believe it or not, you do have options when it comes to getting out from under an upside-down mortgage:  

Option 1: A Short Sale

You can sell your home for less than what is owed on the loan. This process is called a short sale because the sale price falls short of the mortgage balance. You might think lenders would never agree to such a deal, but they often do because getting some money is better than getting nothing at all.

Banks and credit unions, like the rest of us, don’t always like to have uncollectable debts on the books, either.

Navigating the Short Sale Process

Navigating the short sale process as a seller, however, is trickier than a traditional sale. There is a lot of paperwork—and patience—involved. You’ll still need to market your home, show it to potential buyers, and review all of the offers that come in before accepting one.

Once you have accepted an offer, your bank will need to approve it. Oftentimes, they will request additional documentation from the buyer to justify the offered price first. They may also perform a home inspection to confirm that the buyer’s number aligns with the property’s current market value. Large banks may require multiple department members to sign off on the approval as well. 

All of these things together usually take a lot of time. It could be several months or more before you receive an approval—especially if the lender also wants to negotiate with your buyer.

Unfortunately, every day that passes can add to your frustration not to mention your debt obligations. That’s why you should not attempt to short sell your home alone. Work with a real estate agent who knows how to negotiate with banks.

Option 2: A Cash Sale

In most cases, short-selling a house is the best option when you’re upside down on your mortgage; but, it’s not your only option. Investors who prefer cash sales for real estate may be able to help you out, too. Since they’re willing to pay all cash, take your home as-is, and close quickly, it’s possible they can get you out from under the burden of paying for your house depending on how big that burden actually is.

If it becomes obvious that short selling your house is necessary, a real estate investor who also has experience buying short sales will continue to work with you. In fact, whether you start by seeking to short sell your home or finding a reputable local buyer to make an all-cash offer, you might consider combining the two options.

Finding the Right Cash Buyer

The right cash buyer will know how to manage the sale and also work with your bank or credit union. They’re more apt to close—on time—since they’re not dependent on a lender who will loan at the price they offer to you. They may be able to help you get a fresh start elsewhere by assisting with your relocation costs, too.

And, in California, there is at least one real estate investor who won’t leave you hanging if it turns out that they aren’t the right buyer for you. They’ll even help you find a buyer who is.

Hope for What Looks Like a Hopeless Situation

Whatever the reason you now find yourself with an upside-down mortgage, there is hope for what might look like a hopeless situation: the real estate advisors at Sell Your House Direct

With each of our clients, we review all of their selling options. For our clients who owe more on their home than it’s worth—and who can’t, or no longer want to, make the payments—we do often advise that they consider short selling their home.

But, we don’t leave them hanging on advice alone. We connect them with a real estate agent who is also a short sale specialist so that they can receive expert guidance through every step of the process. 

There are some situations, however, in which a cash sale to a team like ours is the best option. When that is the case, we’ll also make you an offer—one that is fair and provides a fast close so that you can move on as quickly as possible. To help you decide which option is the best one for you, we’ll break down all the details in writing.

We charge zero commissions and fees for our service.

We know you don’t need one more thing to pay for at a time like this. You need help and hope. We’re here to provide both.

Owing more to your home than it’s worth is a worrisome problem to have, but not an impossible one to solve. To discuss the best resolution for your particular situation, contact us to speak with a home sales solution specialist today.
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