A homeowner contacted me about his situation. He and his wife were thinking of moving to a different area and a smaller house. His payments are current, but they are underwater on the mortgage.
The house has gone down in value and the market value of the house is now less than what they still owe. What strategies are open to them?
A great number of American homeowners are in this same position. They are making their payments. They are not particularly strapped or in danger. But they are wanting to change for one reason or another, but they are trapped in this dilemma. How can they pay off their mortgage if they sell and move?
There are lots of ways to buy Real Estate. Here are some possibilities.
Short Sale – Credit Hit
In the traditional system, a Short Sale has become a regular procedure now. It usually takes a long tine, but FHA/HUD orders recently have (theoretically) shortened the time a bank has to reply to a SS offer to 60 days. In reality, it is still taking longer in many cases. How can they enforce such rules on banks?
But you will take a Credit Score hit for a Short Sale. It is not nice, not quite as bad as a foreclosure, but do this only if you are really in dire straits.
Buyer Financing Delay
Then you have the delay of financing approval if the buyer is getting a conventional loan. This usually takes 3 months or more. And you have no assurance during the process that it will really go through. Meanwhile the homeowner has the home off the market under the pending contract. If that buyer’s loan is turned down, you start all over.
Sell Subject to the Current Financing
One well-established longtime method is still not well known to the Realtor world. You can keep your current mortgage in place and sell the home subject to your current mortgage. Your contract provides that the buyer will make payments on your current mortgage as the payment plan for the purchase.
There are special procedures for this, which vary a little in each state. This is very tidy and clear in Texas. The Texas Property Code has a specific section that details what is required for this procedure. This is provided for on the standard HUD closing statement, line 503. Standard cookie-cutter Title companies might not be experienced in using this method, since they are generally oriented to the limited Realtor format.
An investor may be able to buy your home when no one else can. Such a Real Estate buyer in your market might be willing to take over your payments and buy the house subject to the current financing. In this sort of purchase, the current mortgage would stay in your name, but the purchaser would make your payments.
This will supporting your credit and leave you free for other options. This would be done with legal processes to cover and protect you. The payments should be set up through a third-party servicer so you can check online to be sure everything is going well.
Paperwork will provide for contingencies protecting you in case anything happens. Lots of Title Companies are very skilled at Subject-To and other alternative procedures for buying Real Estate. Check around. They will know the Title Companies who can do this right.
Subject-To is especially helpful if your home needs lots of repairs, or you have a crisis that requires to sell and move right way. This for of sale can be a longterm or short-term solution for your problem.
Texas Home Strategies provides free market information, evaluation and strategy suggestions for each situation. We buy homes and we are an Affordable Housing Provider. We can make you an offer or suggest other strategies.
Call me and I can personally work with you to see what strategies might meet your needs.
Texas Home Strategies is an Affordable Housing Provider.
We work to match up buyers and sellers for mutual benefit.
We Buy Homes and Close Quickly.
We assist sellers who have trouble selling their home,
and we work with buyers who cannot qualify for a bank loan.
How Can we help you?