One common reason why people contact The Red Door Guys is that they’re having trouble selling a home with negative equity. Although it can be challenging, there are options for homeowners with upside-down mortgages. Find out how to sell a house with negative equity using the tips below.
Assess Your Equity Situation With a Real Estate Professional
Negative home equity refers to owing more on a property than it’s worth. For example, imagine you purchased a house for $500,000, but the market takes a turn, and it’s only worth $400,000 when you try to sell. If your outstanding mortgage balance is $430,000, it’s considered an upside-down or underwater mortgage.
The only way to confirm your negative equity is to review your loan’s balance and compare it to your home’s current value. Contact a local real estate agent or appraisal specialist for more information.
Consider Paying Off the Full Mortgage at Closing
Selling a home with an underwater mortgage isn’t impossible. Depending on how much you owe, you could pay off the mortgage by bringing extra cash to the closing. While this option usually doesn’t lead to delays, it may not be feasible for all sellers.
Before you think about selling a home with negative equity, consider your financial situation. Determine whether you’re able to pay off the mortgage’s outstanding balance should the house sell for its current market value.
Communicate With Your Lender
What happens if you don’t have the cash to cover the mortgage at closing? Thankfully, there are a few other steps to sell a property owing more than its value. Reach out to your lender about the following options:
- A short sale: Your lender may agree to let you sell the house for less than you owe. A short sale agreement is never guaranteed and could take months to sort out, not to mention potentially impact your credit score.
- Loan modification: Modifying the mortgage’s terms or interest rate could help you correct negative equity before you sell.
- Mortgage negotiations: You may be able to negotiate payoff terms with your lender so you can sell without issue.
Take Steps To Increase Your Property Value
If you’re not sure about those solutions for selling a home in a negative equity situation, consider investing in the property to raise its value. Home renovations like kitchen and bathroom remodels, finished basements, or deck construction can all add value. Depending on the changes you make to your property, you could potentially sell it at a price that will pay off your mortgage.
Discover Quick Sale Solutions Near You
Although selling a home with negative equity has its challenges, it’s not out of the question. It doesn’t matter if you’re looking to sell due to Chapter 13 bankruptcy, structural damage, or other complicated situations. The Red Door Guys are willing to buy your house for cash and close quickly.
To request a fair cash offer today, give us a call at (804) 395-7355 to discuss your property.
