Selling a house that is worth less than you owed

Property
  • By mytennessee_
  • 11 Mar, 2022

We are Tennessee home buyers

If you are trying to navigate the process of selling a home that is worth less than you currently owe on it, then continue reading for some My Tennessee Home Solution tips.

What is negative equity?

Simply put, negative equity is the term used to describe the equity of a home that is worth less than what the owner owes to it. This is also known as underwater equity, and it is not a financial situation that you want to find yourself in. The loan that one takes out when financing a home, providing that the buyer does finance the purchase, is a commitment to a lender for a specified amount of money to be paid back in full in a specified period. While this seems simple enough, the ordeal becomes complicated when the value of the home drops below the outstanding loan balance.

If you find yourself in this scenario, then you are at the right place. Continue reading for advice on your next steps and contact My Tennessee Home Solution if you are interested in any of our services.

Trying to navigate the home selling process at a time when selling is a necessity is a complex process. You may feel like you are never reaching a fair end and are losing unnecessary amounts of money throughout the entire process. But we at My Tennessee Home Solution are here to help you reach an optimal outcome with the least amount of stress.

Tennessee Home Buyers

Negative equity means the value of your home is less than the amount you still owe on your mortgage, making it hard to remortgage or move house. Fortunately, you have a couple of options when it comes to finding an exit route. (2) With the constantly fluctuating housing market, we understand how easy it can be for the value of your home to drop below the amount you still owe on it, but that’s what we are here to help you settle! There are a few different routes you can take, but it is up to you to decide how long you are willing to wait to sell your home and what you are willing to do to sell your home as soon as possible.

The first option is to wait to sell your home. This wait can be beneficial because, in the time that you wait to sell your home, the housing market has time to improve in your favor. If waiting to sell is an option for you, then it may be the most beneficial route for you and your buyer.

The next option is to go ahead and sell your home but pay off the difference you owe to your lender. If you are financially able to do this, then it may be a good option for you. It is unideal, but it will save you the hassle of extending a move and help you avoid foreclosure.

If you are in a financially challenging situation that restricts your home selling options, then you may be able to convince your lender to agree on a short sale. Your lender must agree to this sale, and your credit will suffer. Regardless, you may be able to avoid foreclosure.

Finally, the worst of all options is foreclosure. Foreclosure is damaging to your credit, and it can be hard to rebound from this process. However, this can be beneficial if you have no other options and need to release ownership of the property for financial purposes.

Whatever your situation may be, we at My Tennessee Home Solution are here to help you through this stressful time. Check out our other blogs to look for more home selling tips or contact us today for information about selling your home for cash.

Can you sell a house with negative equity?

If your home is currently experiencing negative equity, you are probably feeling the stress of the housing market and wondering if you should consider selling. While that is an option, it comes with drawbacks. Selling your home for less than what you owe will require you to pay the difference to the lender to settle the loan. This is obviously an unideal situation, so we would recommend waiting to sell until the market returns to normal, making some extra payments on your loan in the meantime, or even remodeling your home to add value in the end. Therefore, even though you can sell a home with negative equity, it may not be the best route for you. 

How bad is negative equity on a house?

While negative equity is not the end-all-be-all of your credit score or your home’s potential equity, it is not something that you want to fall into. Negative equity can make it difficult for you to refinance your home and, especially, to sell your home. To avoid falling into negative equity, make sure that you save enough money ahead of purchasing a home that will allow you to make a sizable down payment. Failure to make a down payment, or even a significant one, will automatically put you at higher risk of falling into negative equity because of how little you really own of the home from the start. 

How do I sell my house fast in Nashville, TN?

The mixture of falling into negative equity and not being in a financial position to persevere through the trying wait may push you to be looking for a quick sale to avoid foreclosure. In this case, selling for cash will likely be the best option for you. Selling for cash requires very little input and can allow you to maximize your profit in minimal time, getting you out of a negative equity position and onto a better financial future faster. There are almost always a variety of TN homebuyers looking for discounted homes and are willing to buy yours in a hurry. Ultimately, selling your negative equity home for cash can help you avoid foreclosure in the most timely and least financially-burdening manner. 

How much can a homeowner really expect to make from selling a home?

Many believe that selling a home will set them up with a good amount of money to put towards either a new home or another pressing expense, but they may be wishful thinking. American households control nearly $26 trillion in owner-occupied real estate, according to the Federal Reserve’s 2019 report on household balance sheets. That’s more than the value of all the mutual funds and corporate shares they own. (1) Ultimately, Americans are grossly far from owning their homes, meaning they are consistently owing a lender. In the end, homeowners looking to sell their homes should, unfortunately, not expect an overly impressive amount of money in return for their overly expensive home. 

We buy houses Nashville TN

Falling into negative equity is a scary and unsettling event, especially if you are not financially able to ensure payments that will help you climb out of the hole. If selling your home and paying the difference is looking like your best option, then contact My Tennessee Home Solution now! We are a highly trusted and highly recommended Tennessee house buyer. We will provide you with a fair cash offer that could potentially help you out of a tough financial situation, and we largely allow the sellers to dictate the closing dates.

Conclusion

Selling your home that is worth less than what you owe is an unfortunate situation, both financially and realistically. Financially, you will have a harder time keeping your credit score intact and making that final payment to your lender. But, realistically, you will have a harder time finding a buyer and getting future loans for purchases. If waiting out the negative equity period is an option, then you should consider being patient while also increasing the value of your home and purchasing more equity in it. If waiting is not an option, then look to a cash buyer with the best and most trustworthy offer ASAP.

If we can answer your questions or make an offer on your home, contact My Tennessee Home Solution today!