Modifying your home loan can go a long way in helping you avoid foreclosure and stabilizing your finances. However, you might still want to sell the house even after the modification.
Can you sell your house after a loan modification? Yes, you can. You’ll need to keep a few things in mind, though, because the terms of the loan modification agreement can affect your equity, payoff, and general selling strategy.
Since we buy houses with loan modifications, let us guide you on how to go about selling a home after a loan modification.
What’s a Loan Modification?
A loan modification refers to the process of your lender changing your mortgage’s original terms by:
- Lowering the interest rate
- Adding missing payments to your balance
- Extending the loan term
- Reducing the principal
Loan modifications do provide some form of relief, especially when you’re going through financial hardships. However, they can complicate matters during the home’s sale. Thankfully, understanding your loan modification will be key to avoiding any unwanted surprises.
What To Watch Out For
It’s been a few months or years since you secured a loan modification and, while the modification helped, you’re now thinking of selling the home. Can you sell your house after a loan modification? Yes, you can, but there are a few things you’ll need to be aware of.
Mortgage Payoff Balance
If your lender added missed payments to your loan, your mortgage payoff balance could be a lot higher than you might think. This will affect your home equity and lien status, either reducing or eliminating it entirely.
Equity
Speaking of equity, you’ll need to ask yourself a few questions before selling the home. Do you have the equity to cover the loan and selling costs? Also, will you make a profit, break even, or need funds for closing?
Deferred Balances
If your loan modification agreement includes deferred balances, you will need to pay them at closing.
What To Do Before You Sell
When selling a home with a loan modification, it’s especially crucial that you go into the process properly prepared. We recommend:
- Requesting a payoff statement: Ask your lender for the exact payoff amount, as well as any back-end or deferred balances.
- Reviewing your loan terms: Check to see if there are any special conditions, prepayment penalty clauses, or lender approval requirements.
- Getting a professional appraisal: You’ll need a realistic estimate of your home’s value.
- Building a net sheet: Outline your estimated sale price, closing costs, mortgage payoff, closing fees, and projected proceeds to gain the clarity you need.
Sell Your Home Fast
Can you sell your house after a loan modification? Yes, you can. What’s more, My Tennessee Home Solution allows you to close the sale quickly, saving you the frustrations of placing your home on the open market.
Whether you want to sell a home with a loan modification or a fixed-rate mortgage, we can buy it as is. Call us at (615) 933-5431 to learn more.
