Forbearance allows you to pause or reduce your monthly mortgage payments for a period. It provides much-needed financial relief during a highly challenging situation. However, that temporary lifeline can’t last forever. Once forbearance ends, you will need to have a plan for how to resume making your full mortgage payments on time each month. If your financial situation has not improved, then selling your house could be an option to avoid falling too far behind on payment. Here is everything on how to sell your CT home and avoid foreclosure.
Can You Sell Your CT Home on Forbearance?
Yes, you can! By selling your home before a foreclosure judgment, you can pay off what you owe the mortgage company and, ideally, walk away with some cash rather than losing all your equity. The timing of selling is important, though. You will want to sell before your lender has initiated foreclosure proceedings or will be subject to additional legal fees. You will want to sell while you still have time remaining in your forbearance period so you can market the home properly without missing payments. There may still be some negative impact on your credit from the forbearance period, but not as severe as a foreclosure.
Are There Any Options Apart from Selling?
Absolutely! If you are unable to or do not want to sell your home, there are some options you can explore. However, all these solutions defer the payments and provide temporary relief.
Loan Modification
Some people do everything to avoid communicating with the lenders once they land in hot water. It is much better to discuss the best course forward with them. The lender may agree to modify your loan’s interest rate or terms to make payments more affordable in the long term. The bank does not want to go to court and get themselves entangled in this mess and will try to accommodate your financial situation. You will have to apply and document your financial hardship.
Extended Forbearance Period
Depending on the type of loan, your lender can grant you an extra six-month or longer extension. They can also work out ways to reduce or pause your payments for a specific time frame. You might not be able to apply for this if you are not in good standing with the bank.
Repayment Plan
You may be able to work out a plan to repay the missed forbearance payments over an extended period by making larger monthly payments. It can help you avoid foreclosure, but the amount you must fork out every month increases. It can be a lose-lose situation and land you in a deeper financial hole.
Refinancing
If your home has regained equity and you have a good income, refinancing to a new affordable loan could be an option. Check current market rates and interest to get a lower monthly payment plan.
Always communicate clearly and consistently with your lender, and get any repayment agreements, modifications, or extensions confirmed in writing.
How To Sell Your CT House to Avoid Foreclosure?
As mentioned above, some methods provide temporary relief. But if you’ve already stretched your forbearance period to the limit, cannot afford payments going forward, or have little equity, then selling is probably your best option to avoid foreclosure and a severely damaged credit report. Here are some ways to sell your house in CT to avoid foreclosure.
Short Sale
If the amount you owe on your mortgage exceeds the home’s value, then a short sale is an option. The lender agrees to accept less than the full outstanding mortgage balance as full repayment of your debt.
The benefits of a short sale over foreclosure are that it allows you to sell and move on with far less damage to your credit score. In some cases, the lender may even provide cash incentives or allow you to leave with a small amount of money for relocation instead of being wiped out completely.
To qualify for a short sale when underwater, the lender has to verify that you truly can’t afford the mortgage payments going forward – even with a loan modification. They will ask for documentation like pay stubs, bank statements, debt-to-income ratios, etc. Significant financial hardship is usually required for short sale approval. It is a complex process with specific steps, documentation, and lender approvals needed for this type of transaction.
Deed in Lieu of Foreclosure
If your mortgage is so far underwater that even a short sale won’t work, another option is a deed-in-lieu of foreclosure. It is where you essentially hand over ownership of the property to the lender, and they agree to cancel out your outstanding mortgage balance.
A deed-in-lieu allows you to walk away without going through an official foreclosure process or taking a major credit score hit. Your credit is still impacted since you didn’t make all mortgage payments, but not as severely as with a foreclosure.
The lender has to agree to a deed-in-lieu, and it’s only approved if they verify that you can’t afford the home going forward. You will have to submit similar documentation on your finances for a short sale.
If your outstanding mortgage exceeds the home’s value, the lender could come after you later for the deficiency balance. This will have a negative mark on your credit report for several years, making it challenging to finance another home purchase.
Sell to Neighbor Joe
Time is of utmost importance when dealing with foreclosure. Your quick action can help you get out of this financial hole with minimal damage to your credit. Neighbor Joe has experience dealing with properties in forbearance and can help you navigate this tricky process. Here are some advantages of selling your house to Neighbor Joe.
Sell your House on Your Timeline
Sell your house to us and close the deal on your timeline. We buy houses in three simple steps: you receive a quote, choose a closing date, and get cash for your property. Contact us today, and we will make a cash offer for your house within 24 hours of viewing and close in as little as seven days. Neighbor Joe will not lowball you or take advantage of your situation. You are already under much mental duress, and we aim to make the process as easy as possible for you.
Sell your House As-is
You don’t have to take on the additional burden or expense of cleaning, repairing, or maintaining your house. Sell it to us as-is regardless of its condition. We are willing to buy as long as you want to sell your home. Your house could have minor issues like peeling paint or full-blown foundation damage; we will make an offer!
Save Closing Costs and Fees
We help you get the maximum amount of money into your pocket by avoiding the many different seller responsibilities, like closing costs and fees. You do not pay inspection fees, lawyer charges, escrow charges, broker commissions, etc. We take care of all the paperwork and costs so that you can enjoy hassle-free sales.
Forbearance provided a critical lifeline for many homeowners facing extreme financial difficulties. But as it ends, difficult choices may need to be made again. Act quickly and avoid getting out of the frying pan and into the fire. Sell to Neighbor and make the best of the situation. You have to part with your home, but you will be free from crippling debt and can look forward to a new beginning. Call us today at 203-590-9487 or request a no-obligation quote to get started.