Hello readers, Chester here back in action. Pardon the delay in writing stuff in here for a long time, things have been pretty hectic here at the office that it gets crazy.
About a month ago our Iowa office was paid a visit by a Malaysian green card holder who was asking for our advice. After our long chit-chat I found out that he is a bigtime businessman in Kuala Lumpur and has invested in a lot of condominiums(his raves about The Troika are tempting me to hop on the next plane to Malaysia and get one unit immediately).. Okay, going out of context. So.. I found out that he wants to sell his Des Moine house but his concerns center around the fact that he has an outstanding mortgage. His problem is really common– so I realized it’s best to write about it here so that many of you who face the same problem will get some answers.
It’s Okay to Sell Your House.
There are many reasons why we would have to go out to measures as extreme as selling our homes. It could either be because the home has lost its market value or because we could not possibly pay off the monthly amortization or clear off the debt any longer. Or for whatever reason of selling a house, the outstanding mortgage on it will make it impossible.
The first thing to do in this situation is go to your money lender and discuss your options. No current mortgage plans anywhere would allow you to sell your house and because the lender is the only person who has the power to adjust it, it would only be logical for you to go and talk to them about it.
So suppose your lender allows you to sell the house, what do you do? That depends on how much the house will sell, how you can increase its market appraisal, and how much capacity you have to pay off the remaining loan.
Selling, Short Sales, and Foreclosure
Selling your house at an amount that can possibly pay off the remaining amount in your loan is ideal and quite frankly, rare. Selling the house at a price that can pay off your remaining loan and get a little extra will require you to pay your capital gains tax. But these are far too ideal and does not come off without a hitch or big investment on upping your house’s current market value.
Commonly, homeowners with a lot of extra money sell the house even at a price that could not erase the loan altogether. Because they can, they simply pay off the remaining balance with their own money and just move on to their next house or hunt for their next apartment.
But that’s not always the case. That’s why there is such a thing as a short sale. A short sale is when the lender allows you, the homeowner, to sell the house at an amount that’s lower than the remaining amount on the mortgage loan. This happens when the lender understands that the real estate market is in itself less than ideal. Over foreclosures, lenders prefer short sales because they can still try to get as close to their ideal price (which is close to the remaining balance on the mortgage). In foreclosures, they have less control on the amount because foreclosed properties end up in auction.
Learned a lot? Let The Action! Real Estate Blog educate you further. Check back next time 🙂