You’ve had a tough time making your house payments in the past few months, and now you are considering selling your home to pay off your debt. If you can no longer afford to keep your home, you may be able to sell it for more than you owe and walk away with money in your pocket and peace of mind. This guide highlights things you need to know about selling your home during forbearance.
What is a Mortgage Forbearance?
A mortgage forbearance also called a mortgage moratorium, is when your lender agrees to temporarily delay your monthly payments in situations of a short-term crisis. A forbearance can be very helpful if you’re struggling to make your monthly mortgage payments but don’t want to lose your home to foreclosure. While it might sound like a great idea to go into forbearance to pause payments each month, the truth is that forbearance isn’t always beneficial. It is, however, extremely important to connect with and discuss the process with your lender thoroughly to understand your options.
How does Mortgage Forbearance Work?
A mortgage forbearance works by giving the borrower temporary relief from making mortgage payments. The interest on the loan will continue to accrue, leading to a large one-time payment being due at the end of the forbearance period, also known as a balloon payment. It is essential that homeowners considering going into forbearance take the time and effort to do due diligence and thoroughly vet the pros and cons before agreeing to this option.
Benefits of Selling Your House While Home Values are High
Selling your house while home values are high will offer the following benefits
- Demand is High
Right now, with a combination of ongoing supply shortages and a high demand by buyers, now is a great time to sell your home. With interest rates on the rise, it just might be beneficial to sell sooner than later. If interest rates continue to rise, buyers may retreat and hold off on purchasing. So if you are on the fence, now is the time to act.
2. Preserve Your Credit
It also helps your credit score by having a paid in full mortgage loan on your credit report instead of late payments, which may be reported if you come out of your forbearance and can’t comply with the new terms of the loan, which may put you in a worse position than when you started.
3. Get Ahead of the Game
You may be able to negotiate a rent-back agreement with the buyer to give yourself time to find a new home. This allows you to continue living in your home while you look for another home to purchase with terms that fit your budget. You are then in the driver’s seat.
5 Budget-Friendly Ways to Spruce up your Home to Get Top Dollar
One of the easiest ways to give your home a facelift is with a fresh coat of paint. Look around to see what touchups need to be done or areas that need to be updated.
Buyers will expect major appliances like the stove and dishwasher to work. Get major appliances fixed before you get ready to show your home.
3. Clean your carpets
In addition to vacuuming them regularly, it’s essential to take care of stains as soon as possible. When you plan on listing your home, deep clean the carpets with a heavy-duty steam cleaner so they don’t stand out against freshly painted walls and sparkling hardwood floors.
4. Depersonalize and Clear the clutter
Remember, less is more when packing away personal items. Remove outdated wallpaper and paint colors to make the aesthetic as neutral as possible. Pack up personal items and family photos. Think modern and neutral.
5. Get Rid of Odors
Regardless of whether you have pets or not, a musty smell could be a deterrent to buyers. Odors from the sink or garbage disposal might indicate a plumbing issue. Hide any litter boxes when showing your home and use air fresheners. Have pets in their crate and remove excess pet hair.
The Bottom Line
Perform due diligence and discuss your options with your lender and a Real Estate professional. There are several options and resources available to assist you.
The California Mortgage Relief Program has expanded!
New changes include:
1. Now covering past due property taxes
2. Higher income limits
3. Open to homeowners who missed payments in 2022.
Learn more at CaMortgageRelief.org/who-is-eligible.