Can I sell my home if I’m behind on my debt?


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If you’ve fallen behind on your debt payments and can’t figure out a way to catch up, you might be wondering if selling your home is an option. The short answer is yes, it can be. That is, so long as your lender hasn’t foreclosed on your home yet.

The foreclosure process begins once you fall behind on your debt payments. You generally have up until foreclosure takes place to sell your home yourself. However, the process of selling your debt before foreclosure may not be simple. Here’s what you need should know about selling your home when you’re behind on your debt repayments.  

Can I sell my home if I’m behind on my debt?

Whether or not you can sell your debt before foreclosure will depend on whether your debt is worth more or less than what you owe on your debt.

If you’ve fallen behind on your loan payments but the value of your home is greater than what you owe on your home loan, you may be able to sell your debt and use those profits to pay back your lender.

If the value works out to be greater than what you owe, you could follow the same steps as you would normally take to sell a home. In some cases, a lender’s permission isn’t needed to sell a home this way, but it’s best to check with your lender before taking any action.

How a short sale works

If the bid you get on your home is low enough that it won’t cover the total amount you owe on your debt, it’s called a short sale. If you accept the lower offer, you’re going to end up still owing your lender.

Before approving a short sale, your lender may require you to submit some paperwork. This may include an offer letter and an explanation as to why you can no longer make your debt payments. Your lender may also need financial documents such as income statements.Your lender may have your home appraised themselves to decide if the offer you’ve received is fair.

In some cases, a short sale may be preferable to foreclosure. Generally, short sales tend to do less damage to your credit score compared to a foreclosure. This means that may have a better chance of being able to apply for a debt and have a new debt later on, as well as having a better chance at being approved for credit cards and other types of loans in the future.

*Disclaimer: This article contains general comments and recommendations only. It is not intended to be and should not be construed as legal advice. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action, you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs.

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