With the Spring Real Estate Season right around the corner, more home owners here in the Metro Detroit Real Estate market will be considering putting their home up for sale. Many potential sellers will come to me and ask what are their options if the owe more on their home then what it is currently worth. Here are the three options you are underwater.
1.) Bring the difference to closing – I know this sounds pretty basic but sometimes sellers need to look in liquidating some stocks or retirement plans to get cash to bring to the closing. Sometimes sellers are very close to breaking even and his may be an option that can help you make ends meet.
2.) Contact your lender to see if you can arrange a loan after the closing – I have had clients in the past who have contacted their lender and have been able to arrange a unsecurred line of credit once the closing takes place. Also most lenders prefer to not turn a secured loan into an unsecured loan, however if you have extremely good credit and possibly have a smaller bank or credit union who holds your mortgage, this may be an option for you to be able to sell your home and not necessarily bring any cash to closing.
3.) Consider a Short Sale – I have written numerous postings on how to go about a short sale but for those who are unfamiliar with what a short sale is, this is when you can prove a hardship to the bank and they forgive your debt on your mortgage. PLEASE NOTE: Just because your underwater is not a gaurantee by any means for a short sale, this just may be an option. Out of all these options, this probably is most detrimental to your credit. By doing a short sale you will more than likely not be able to secure a new mortgage for a minimal of 2 to 3 years.
With any of these options, if you ever have a question or know if someone who needs some professional real estate advice on selling their home, please feel free to contact me anytime at (248) 939-9393.