Avoiding Foreclosure: Tips for Selling Your Home

By Karen Lawson
Mortgage Credit Problems Columnist

If you can't make past due mortgage payments, your lender will soon start foreclosure. Selling your home can help you prevent problems associated with foreclosure, and may also provide a "new start." Depending on how much you owe your mortgage company and how real estate markets are performing in your neighborhood, you can find ways to promote a quick sale of your home.

Crunching Numbers to Stop Foreclosure

You can't afford your mortgage payments and your lender is ready to start foreclosure. What should you do? Selling your home may be one way to meet your mortgage obligation. But wait! Your kids have never known another home. This was your parents' home. You have memories here. These are great reasons for listing your home for sale; you don't want foreclosure to be your final memory of your home. Call your mortgage company today (no, not tomorrow!) and ask:

How much is past due and what is the balance of the mortgage loan?
Has your lender started foreclosure? When will foreclosure start?
Will the lender extend forbearance while you list your home for sale?
Are there any mortgage workout programs to assist with a sale?

What is Your Home Really Worth?

Your home may seem priceless, but reality sets in with foreclosure on the horizon. Foreclosure will appear on your credit record for up to ten years, and can significantly reduce your credit score. This can negatively impact your ability to qualify for a new mortgage or a rental, and can influence hiring decisions and insurance rates as well. After contacting your mortgage company, find a licensed real estate agent or broker who specializes in "distressed" sales. These folks know how to work with you, potential buyers, and your lender to achieve a quick sale. Once you determine what your home is worth, you and your real estate representative can establish an asking price and marketing plan. But what happens if your home isn't worth enough to pay off your mortgage?

Avoiding Foreclosure with a Short Sale

Instead of completing foreclosure, your lender may willing to approve a market-value purchase offer regardless of how much you owe on your mortgage. Your lender agrees to accept the proceeds from the sale of your home as full satisfaction of your mortgage. If a short sale is required to sell your home, you won't receive proceeds from the sale, but avoiding foreclosure and its consequences is certainly worthwhile.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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