Equity is crucial when you’re considering whether or not to sell your home. Not only do you need your home to be worth more than what you still owe on your mortgage, but you also need a little bit of cushion to ensure profits from a sale can pay fees and any closing costs you may be on the hook for.
But how do you sell a house for less than the mortgage? Is it even possible? If you owe more than a house is worth and want to sell, you do have some options. Here’s a look at what you can do.
Stay Where You Are
The simplest thing to do when you owe more than a house is worth and want to sell is to change your mind and stay in the home. In time, your equity should increase to a point at which you can sell your home and make more money off of it. That said, things come up and you can’t always stay in your home, even if it’s the best option.
Rent It Out
Another option you can pursue is to rent out your home. The goal here is to find stable tenants who are willing to pay a rental rate that covers your mortgage principal and interest, as well as your taxes and insurance. In an ideal world, you would even make a little bit more in rent — which could then go toward the inevitable repairs and maintenance.
However, if you’re desperate to get out of your home for some reason, you could even consider renting it at a bit of a loss. Remember, when you sell in the future, you should have much more equity and be able to get much more in profit.
Pursue a Short Sale
A short sale is the option of last resort. It will allow you to get out from under your home, but it will also damage your credit. A short sale simply means that the lender agrees to accept less than what is left on your mortgage and forgive the difference to let you sell. Why would they do that? Because taking a little bit less is far better than a homeowner declaring bankruptcy and leaving the lender with far less.
A short sale is a serious step, though, and it’s one that should be avoided if at all possible — but know that it is an option.
Get Guidance From CENTURY 21 Core Partners
When you want to sell a house for less than the mortgage amount, make sure you have expert guidance from professionals. At CENTURY 21 Core Partners, we are the go-to team of real estate professionals for homeowners and seekers in York, PA. No matter your situation and amount left on your mortgage, you can count on our team to help you reach the best possible outcome.
Contact us today to talk to one of our real estate professionals.