You went into mortgage forbearance more than a year ago in order to save your home, but now your financial situation is not much better and selling your home may be your only option. Now you are asking yourself, “Can you sell your home in forbearance?”
What is Forbearance?
When a mortgage borrower stops paying their mortgage, the lender is left with no choice but to pursue foreclosure proceedings. The foreclosure process is different in every state, and can include Judicial or Non-Judicial foreclosure. There are ways to delay foreclosure, but in the end, the lender must be paid. During the government response to the recent pandemic, temporary Mortgage Forbearance programs were enacted in order to help people stay in their homes without the fear of foreclosure. These Forbearance measures allowed home owners to temporarily pause mortgage payments on their primary residence, without fear of foreclosure. Under this program it was possible to forbear your mortgage payments for up to 18 months. It is important to understand that under Forbearance, your payments aren’t forgiven, but rather postponed until a later date. To learn more about Forbearance under COVID-19 Mortgage Relief, you should check out the CFPB information page.
The COVID-19 Mortgage Relief Program also includes some safeguards to help homeowners as they exit the forbearance program. Homeowners will have the opportunity to seek loan modifications or other loss-mitigation from their lender, before foreclosure proceedings are filed. But, it is important to note that these protections are only for Federally backed loans. Loans which are not Federally backed by programs such as FHA, or VA, are subject to foreclosure without any attempts at modification, once forbearance ends.
Can You Sell Your Home while In Forbearance?
The simple answer to the question of whether you can sell your home while in forbearance is Yes! There is nothing inherent about forbearance that would prohibit you from selling your home while in forbearance, but you must keep in mind that your payoff amount as noted in your monthly mortgage statements, may be considerably different from what you actually owe. This is due to the fact that your missed payments must still be repaid at closing.
If you have exhausted your full forbearance time period and are still in financial trouble, you can speak with your lender to see if they will extend your forbearance in order to allow you to sell your home. Big banks and mortgage lending institutions are in the business of lending money, not selling homes. If you are up front with your lender, it is very likely they will work with you to allow you to sell the home. They do not want to foreclose on your property and deal with the hassle and expense of selling your home.
Things you must consider before you sell your home while in forbearance.
Just because you can sell your home doesn’t mean it is sellable! In order to list a home for sale in a manner that will garner the most attention and money, it is often necessary to spend a considerable amount of time and money in preparation.
- Does your home need significant repair or renovation?
- Is your home clean and de-cluttered enough to allow buyers to show?
- Can you afford to make the necessary repairs or upgrades?
- Can you afford to hire a cleaning company to prepare your home?
- Can you wait the 60-120 days it may take to find a buyer for your home and eventually close?
These are all very serious questions you have to ask yourself before selling your home. Every month that you own your home, you owe taxes, insurance, and mortgage payments. If it takes you three or four months to sell your home, that is three or four additional months of payments you owe. When you then take into account the necessary commissions for real estate agents, selling your home to an investor might prove to be most beneficial.
Selling Your Home To An Investor
Selling your home to an investor is the best choice if you want to sell fast, and are not in a position to make repairs, attend to deferred maintenance, or clean and de-clutter. Most investors will make you a contingency-free cash offer for your home in its as-is condition. You will be able to sell and close when you want to, not when some buyer or bank is forcing you. You will save thousands of dollars on agent commissions, property taxes, insurance, and mortgage payments by selling fast and not holding onto your property for months while it sells, by selling your home to an investor.