Author: Dan Rafter / Source: Wise Bread
It’s no fun selling a home when you’re underwater on your mortgage. Being “underwater” is when you owe more on your mortgage loan than your home is worth.
Unfortunately, there are times when homeowners have no choice. Your employer might transfer you to a new job across the country.
Or your home might be too small for a growing family. If you’re in this situation, the odds are high that you’ll have to write a check to your lender once your home sale closes. But you might be able to reduce the amount you owe by setting the right asking price and staging your home so that it looks its very best. Here’s how to sell your home when you’re underwater on your mortgage. (See also: Why You Should Call Your Mortgage Lender Every Year)The challenge
Why is selling a home with negative equity such a financial hit? Instead of making money on your home sale, you’ll lose it.
Say you owe $200,000 on your mortgage, but your home is worth only $180,000. You’ll struggle to sell your home for more than that $180,000 value. And even if you do sell at that figure, you’ll still owe your lender $20,000 after you close your sale. This means you’ll have to write your lender a check for $20,000 at closing. That’s not the outcome any home seller wants.
Wait to sell
What if you are underwater on your mortgage? The best advice is to hold off on selling your home, if possible. That way, you can hope that your home gains value — hopefully enough so you no longer have negative equity.
You can also wait until you make enough monthly mortgage payments so you no longer owe more on your home loan than it’s worth.
If you can send extra money to your lender to be applied directly to reducing your loan’s principal balance, you might be able to build…The post How to Sell Your Home When You’re Underwater on Your Mortgage appeared first on FeedBox.