If you’re looking into selling your home, you already know that the process can be very long and arduous. You need to get the house ready, find a good real estate agent that you trust, figure out your price point, show the house, deal with offers, and then finally comes the mountain of paperwork. Basically, selling a house is a nightmare!
This process can get even trickier if you’re dealing with unpaid debt. Debt is like an ominous, dark cloud that follows you around everywhere you go. You know it’s there, but what can you do about it? Will you still be able to sell your home? And if so, will you still be able to make any profit? Let’s have a quick look at how unpaid debt may affect your home selling process, and how Property Pals can help you get cash for your property.
What Kind of Unpaid Debt Affects Selling My Home?
It is actually quite normal for you to be in debt when selling your home. Typical mortgages range from 15-30 years, so if you haven’t lived in your home that long or paid off your entire mortgage, then you will have to pay this debt at the time your home sells.
However, a problem arises if you end up owing more on your home than you will make in the sale. This is called being “underwater.” This generally happens if the housing market tanks or you fall behind on payments. If you’re underwater or have negative equity on a house, you might want to try and sell your house before you go into foreclosure. If you owe more than you make on the sale of your house, you will have to either pay the difference or request a short sale from your lender.
There are also other debts that you might have to pay off during closing on your home. When deciding on a sale price, make sure you keep in mind any of these potential debts that you will have to pay before taking home any profit.
- Any secured debts (home equity lines of credit)
- Tax liens
- Other liens
- Judgments (if an unsecured creditor has filed a lawsuit)
- Outstanding utilities or special assessments
- Agent commission and closing costs
Why Selling A Home With Unpaid Debt Can Be Tricky
Yikes, that’s a lot of places you might have to spend your money before you get to take any to the bank! It’s likely that you’re also hoping to have enough money for a down payment on a new home. You must calculate your desired net proceeds while paying attention to all debts and your goal for the sale of your home.
Things get even more difficult if you’re underwater. If you’ve found yourself in a situation where you owe more money on your home than it’s currently valued at, you will have to pay the difference as well as the real estate agent fees and closing costs. If you cannot afford this route, you have to work with your lender to come up with a solution. This ranges from a loan modification, repayment plans, refinancing, a short sale, or in the worst case, a foreclosure.
How Can I Get Rid of My Unpaid Debt?
Before selling your home, you should sit down and calculate all of your unpaid debts. If you’re able to pay off any of your debts, you’ll want to start with any secured debts and liens. These are the debts you owe that can potentially cause foreclosure on your home. Many people who find themselves in this situation cannot afford to pay off their debts, and therefore are looking to sell their house to pay them off.
If you’re hoping to pay off all your debt with the sale of your home, you need to make sure that you’re going to make enough profit to cover the debts. It’s always best to sit down with a professional because many times hidden debts can come up during closing. First, you need to figure out what the value of your home is. Then compare that amount with how much debt you owe. From there, you can estimate your final proceeds, if any, after paying off all your debts.
Options For Selling Your Home With Unpaid Debt
As previously mentioned, if your only debt is your mortgage and you owe less than the value of your house, you can proceed with the sale as normal. If you’re underwater, your only two options for selling your house are paying the difference in cash or working with your lender to come up with a solution. Quicken offers some alternative solutions to selling your home:
- Wait it out: if the market is to blame, wait for the market to go back up
- Make extra payments: play catchup by making extra payments
- Rent your home: move into a more affordable space or rent out an extra room
- Raise the value: upgrade your home in an order to increase its value
If your debts are liens and judgments, you need to do some calculations. These debts will have to be paid during the closing, so make sure you have enough proceeds from the sale to cover everything you owe.
How Can I Sell My Home With A Unpaid Debt Today?
If you’re thinking “I need to sell my house fast,” Property Pals USA has got you covered! Our goal is to take all the stress and expenses out of the home selling process. By cutting out legal and real estate agent fees, you’ll be saving money that can go towards paying your debts.
We buy hard-to-sell homes as-is. We offer cash for houses, so you can get your debts paid off ASAP! We will handle everything on our end so that you can feel a huge weight off your shoulders and move on with your life. We handle all of the legal fees and manage the process to resolve outstanding debts on your property.
Take the first step today and request a fair, cash offer on your home now!