Wednesday, September 09, 2009
A strategy for selling a house that's worth less than its current market value
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When your house is worth less than the loan balance, is there any alternative to a short-sale which requires that you be unable to pay your mortgage and results in damage to your credit rating? We've had some success with buyers who, for various reasons, cannot qualify for a mortgage loan. They are sometimes willing to pay an amount equal to the mortgage balance if they can 'assume' the loan. Almost all mortgages have 'due on sale' clauses which prohibit buyers from assuming these loans. Depending on how your particular 'due on sale' clause is written, we might be able to craft a transaction which would facilitate this scenario. The downside to a seller is that they are not released from responsibility for the existing loan which might impact their ability to buy a new house or require them to cover any payments missed by the buyer. The upside is that a seller can pass a cash flow drain to a buyer who otherwise couldn't borrow to purchase the home.
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