Can I Sell My House If I Still Owe Money?

  • December 12, 2019
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Is it possible to sell my house if I owe money on it? This is a question that many homeowners who still have a mortgage or owe back taxes ask us. The situation can get quite stressful, particularly for those who are going through a rough patch and need to sell their house fast. These homeowners wish to sell their property but are hesitant because they think that their debts would not allow them to go through with the sale. However, we have assisted people in dealing with such situations successfully.

Let us shed some light on the common scenarios we see and how they can be handled.

Selling a house with a mortgage

There is no reason to panic. It is more common these days to sell a home with a mortgage than one without one. You can sell your house the traditional way, even with a mortgage. You have to remember that house sales can be quite costly – realtor fees, closing costs, and attorney fees all add up. Then there are repairs and the carrying costs for the months it sits on the market that you need to think about. Therefore, it is crucial that you have a clear idea of the current real estate market so that you know what you can expect from the sale and ensure it covers your debt obligations.

The only thing to keep in mind is that if the house is sold for a lesser amount than your mortgage, you will need to pay the remaining amount to cover the difference. When selling to an investor like us, we have a couple of strategies we can implement to avoid paying any money out of pocket – if you expect that you are in this situation contact us immediately to see how we can help you.

Selling a house with a mortgage

Selling a house in foreclosure

The situation can be more daunting when there is a risk of foreclosure. Two reasons can typically lead to people going into foreclosure – the inability to pay the mortgages and not paying property taxes. This makes selling the house challenging since you are facing a deadline – the auction date. Your mortgage quickly starts ballooning with interest and fees, leaving you with fewer and fewer options as time passes. Additionally, these fees will erode away any equity that you have in the property.

When faced with such a situation, you should seek the guidance of reputable investors, such as Leave The Key Homebuyers. We will meet with you and discuss your options and see whether you’d benefit from a cash offer or a short sale to help salvage your credit and any equity in the home. These are complex situations and you should seek the assistance of a professional who has the experience navigating the foreclosure process.

What if you have a lien on your house?

If you have a lien on your house then it must be paid off for the house to be sold. In order to avoid delays with title, it’s best if the lien can be paid off in advance, but you may be able to use your home sale proceeds to pay off the lien by having it written into your settlement agreement and deducting the lien amount from the proceeds you’ll get at closing.

We have seen such situations quite often. We take this cost of clearing the lien into account while making the offer and then work in association with the lien holder to make sure that the title gets clean. Once this is done, you can sell the house to us without any legal implications.

Is it possible to sell your house if you owe IRS?

If you are aware that an IRS lien is coming your way, it is advisable to sell your house as fast as you can. While it is true that an IRS does not force one to sell their house directly, its impact on your life can be significant.

In this case, you have options other than selling your house. You can typically work with the IRS to set up an installment plan if it is not possible for you to pay the full amount immediately. If you adhere to the installment plan, IRS will not bother you, and there is a chance that your lien will be withdrawn. Call us today if the IRS is breathing down your neck, we have experience negotiating with the IRS to purchase the property and clear your IRS debt.

However, if this is not a feasible option for you, you need to think about selling the property. This will ensure that the IRS is paid off, leaving you the chance to start fresh. You can then make sure that you adjust your expenses such that you do not have to face any trouble with IRS in the future.

Understanding the money flow in Real Estate closing

It is important to keep in mind that when you sell your house, the flow of money first goes to the people you owe money to before it comes to you – you get whatever is left over.

The first thing that a title company does during closing is issue funds to the stakeholders. Let us give you an example. If a house costs us $190,000 wherein it had a mortgage of $90,000, the title company would first send the $90,000 to the mortgage company. The remaining amount would then be wired to you after the closing costs and other fees have been deducted. In case of a lien, we will need to work with you to get it cleared before we proceed with the sale.

Reach out to us for help

If you are unsure of what needs to be done so that you can sell your home and think that some obstacles might come your way, contact us. We answer all the questions you may have about selling your home. It is not necessary that you sell your house to us, but we’d like to help you arrive at whatever the best solution is for you. Having purchased hundreds of homes on Long Island, we are suited to help you in any situation.

Is It Possible to Sell My House If I Still Owe Money?