How do you sell your house if you owe much more than it's worth?

How do you sell your house if you owe much more than it's worth?

Postby flainn » Sat Apr 30, 2011 5:49 pm

Like, what do you do afterwards? I imagine you probably can't get another mortgage.
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How do you sell your house if you owe much more than it's worth?

Postby leandro » Sat Apr 30, 2011 5:51 pm

Well someone has to pay the money you owe on it, someone isn't gonna buy it if it has an open mortgage or 2 on it already
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How do you sell your house if you owe much more than it's worth?

Postby erchanbold72 » Sat Apr 30, 2011 5:52 pm

Well someone has to pay the money you owe on it, someone isn't gonna buy it if it has an open mortgage or 2 on it already
I would imagine that the bank would seize your house (foreclosure) and move to sell it as soon as possible to recoup whatever $$ it can. This sort of widespread risky lending by banks, and the subsequent defaulting on loans like you just described, were a major factor in the recent economic crash.
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How do you sell your house if you owe much more than it's worth?

Postby sissy33 » Sat Apr 30, 2011 5:54 pm

You can't sell it unless you can come up with the extra money, or roll the old mortgage into a new one. These days, most banks won't want to roll it over, because it means more risk for them.

If you have excellent credit and income, you could rent out the old house, and get a second mortgage for the new one. But that puts you at risk if your tenant doesn't pay, or if the old house needs repairs.
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How do you sell your house if you owe much more than it's worth?

Postby gwernach » Sat Apr 30, 2011 5:57 pm

You are asking two different questions. The first question (I'm going to rephrase it for clarity) is:

What will happen if I sell my house for less than the mortgage?

Answer: Let's say you owe $200,000 on your mortgage. Let's say that you sell it for only $175,000 because that's all it is worth. The difference is $25,000. Your mortgage lender will require that you pay back the entire $200,000 which is what you owe. You will have to give your mortgage lender the $175,000 from the sale of your home. You will also have to come up with another $25,000 (the difference) to pay off the mortgage in full. If you are able to pay the loan off in full ($175,000 + $25,000 = $200,000), then everything will be fine. The fact that you did it this way will have NO bearing on your ability to get another mortgage.

Your second question is: Will I be able to get another mortgage?

If you are unable to come up with the $25,000 "shortfall," your mortgage lender has the right to sue you for it. The fact that you did it this way WILL go on your credit report and you may find it difficult to get another mortgage.

Hope this helps.
Good luck!
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How do you sell your house if you owe much more than it's worth?

Postby theodoric » Sat Apr 30, 2011 5:59 pm

You come up with the money to make up the difference if you can, if you can't it is better to make an agreement with with the bank or who ever holds your mortgage for a short sale instead of letting them foreclose but either will ruin your credit rating for years, so plan on renting for a long time. Even that may be a problem since landlord also care about your credit. You could sign a lease and move before the credit agencies find out about your mortgage problems..
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How do you sell your house if you owe much more than it's worth?

Postby azai » Sat Apr 30, 2011 6:00 pm

There is no "afterwords" if you can't come up with the cash shortfall to close on the sale. Otherwise, the sale won't happen. Your only other option is to ask the lender to approve a short sale.
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How do you sell your house if you owe much more than it's worth?

Postby kameron14 » Sat Apr 30, 2011 6:02 pm

you won't be able to sell it at all unless you can pay the mortgage company the difference AT CLOSING or they agree to a short sale, which will negatively affect your credit for awhile
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How do you sell your house if you owe much more than it's worth?

Postby baigh80 » Sat Apr 30, 2011 6:04 pm

You cannot sell your house unless you pay off the mortgage. So, you can sell and bring the money that you need to pay off the mortgage (i.e. you sell for 100k and you owe 200k - you'll need to bring 100k + closing costs in order to sell).

If you don't have the money, your options are to try and get the bank to approve a short sale or keep living in the home.

No, if you do a short sale, you will not qualify for another mortgage in the near future.
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