Buying a house is a huge commitment. Sometimes, first-time homeowners learn that they don’t really want all of the extra work and hassle that comes with owning a house. In other cases, circumstances change, and the house that was great becomes an untenable burden. No matter how you get to the situation, if you want out of a mortgage, you need options. Here are five ways you can get out of a mortgage and into a better situation:
1. Sell Your House the Old-Fashioned Way
By far the most common way to get out of a mortgage is through a traditional sale. Contact a realtor. Put your house on the market. Go through all of the steps, and ultimately, you can sell your house. The goal is to sell for more than you owe on the mortgage. As long as this method is successful, you walk away with no more mortgage and a pile of cash you can use to get started on your next home. Of course, there are no guarantees with a traditional sale, and unless you’re in a very hot market and willing to underprice, a traditional sale can take months to years to complete. But if you have the time, this is the common practice.
2. Deed in Lieu of Foreclosure
If you don’t have time or you just want out now, you can contact your lender and offer a deed in lieu of foreclosure. Ultimately, it’s up to the lender to decide whether they really want to go this route, and market conditions will influence their decision. That said, it’s usually possible to negotiate this kind of agreement. Your lender accepted the house as collateral against the loan in the first place, so it’s not odd to offer them the deed in order to walk away.
It’s important to understand that this option will always lose you money. You’re offering the deed to settle the debt. That means any mortgage payments you made until now are forfeit. You walk away with nothing. You don’t have any more debt, but you don’t have anything to show for your investment either.
Most people who are struggling to make mortgage payments should look into this option first. A refinanced mortgage can change your monthly payments. That can make it easier to catch up and/or stay ahead. Refinancing almost always means that you’re delaying the day when the house is fully paid. You also need to pay close attention to interest rates and the total payment schedule. If you’re considering refinancing and don’t know much about it, you should contact your local housing assistance office. They usually offer free counseling to help you make sure your refinanced deal is in fact a good one.
4. Government Assistance
Speaking of government assistance, if you went through any of the federal loan programs, you have extra options. This includes FHA loans, agriculture loans, veteran loans, or any of the other less-common programs. If you’re having trouble making payments, you can reach out to the program office that helped you. They can look into options with you, like refinancing or modifying the loan. A loan modification is similar to refinancing in that it will change your monthly payments, but it’s a little more complicated, and you’ll need to go through an approval process for it.
5. Fast Sale
Ultimately, selling your house is the best way to truly get out of a mortgage. The traditional sale is the most common choice, but it’s not the only way to sell your house. You can consider a short sale or a cash sale.
A short sale is where you negotiate with your lender to sell the house for less than it’s worth but still settle the debt. That’s a complicated negotiation, but it usually gets you out of the mortgage faster than a traditional sale.
The other option is to sell to a real estate investor like Purple Mountain Holdings for cash. We can take you through the entire sales process, and we can get it done in a week, if you’re in a hurry. Simply contact us, and fill out an easy form. We’ll get in touch with you to schedule a walkthrough. Once we see the house, we’ll make you an offer. If you like the offer, we’ll close. If you don’t like the offer, you have all of the other options on this list. It couldn’t possibly be easier.