Falling behind on house payments can feel overwhelming. Between the phone calls, past due payments, and threat of legal action, it’s hard to know what to do next, especially if your job loss or financial difficulty came out of nowhere. But you’re not out of options. In fact, now might be the right time to take back control.
Whether you’ve reached the end of your forbearance period or you’re still in discussions about forbearance agreements, it’s important to act quickly. The sooner you understand your current financial situation, the better. Depending on your mortgage terms, you might qualify for mortgage relief options through federal government programs, like those offered by the U.S. Department of Housing, Freddie Mac, or the Federal Housing Administration. You could also explore a fresh start by selling your home.
That’s where Senna House Buyers comes in. We help homeowners like you sell quickly—no repairs, no agent commissions, and no pressure. Even if you’ve missed multiple payments or received a notice of default, we’re here to help you navigate your next step.
Don’t wait for foreclosure or more missed deadlines. With the right support, you can avoid added stress and move forward with peace of mind. Contact us today for your cash offer.
Step 1: Assess Your Financial Situation
Before making any decisions about selling your home, you need to thoroughly assess where you stand financially. Understanding your exact situation will help you determine the best path forward.
How far are you behind on house payments?
Being in mortgage arrears simply means you’ve missed mortgage repayments. Initially, calculate the total amount you owe on your mortgage loan, which includes not only your missed payments but also any late fees and accrued interest. Missing even a single repayment can negatively affect your credit history.
Moreover, your mortgage company will likely contact you once they notice a missed payment to find out why it hasn’t come through. You may also be charged a penalty fee for late payment, so check your mortgage agreement for these details.
For homeowners who miss a mortgage payment, their account falls into ‘arrears’ status. Subsequently, once the system identifies that your account is in arrears, your lender will typically write to you detailing the outstanding amount. As a result, your payment history is shared with Credit Reference Agencies, which impacts your credit record and may affect your ability to obtain credit in the future.
Check your home’s current market value
Determining your home’s current market value is essential in this process. You can accomplish this through a professional appraisal or by using online tools that provide estimates. Afterward, calculate your home equity—the difference between your home’s current market value and your outstanding mortgage balance.
Your home may be in one of two states: above water or below water. Specifically:
- Above water: The value of your home is higher than the amount you owe on your mortgage
- Below water (or underwater): You owe more on your mortgage than the current market value of your home
This distinction significantly impacts your selling options. Although selling when underwater is challenging, options like a short sale may help you avoid foreclosure and minimize financial impact.
Can you list your house if you are behind on house payments?
Yes, you can absolutely list and sell your house even if you’re behind on payments. Nevertheless, understanding the implications is crucial. Generally, when you sell your home while behind on your mortgage, all those missed payments, late fees, and penalties come out of your sale proceeds.
For instance, if you sell your home for $250,000 and owe $200,000, you’d also need to subtract any past-due payments and fees—perhaps $8,000—before receiving your final check. That would leave you with approximately $42,000, minus other closing costs like taxes and title fees.
If you owe more than your home is worth, you can still list your home but must disclose that you’re attempting to get your lender to agree to a short sale. Additionally, acting quickly is vital—the earlier you start the listing and sale process during the pre-foreclosure period, the better outcome you can expect.
Alternatively, if you need to sell quickly and with less hassle, Senna House Buyers offers cash purchases that can help you exit your mortgage situation without the lengthy process of traditional home sales. This option is particularly valuable when facing mounting late fees and potential foreclosure proceedings.
Step 2: Talk to Your Lender Early
Once you’ve assessed your financial situation, reaching out to your loan servicer should be your next immediate step. Taking action early can open up several paths to resolve your mortgage difficulties and potentially save your home.
Why communication is key when you are behind on house payments
Being proactive about contacting your lender is crucial when you’re falling behind on mortgage payments. Most importantly, many lenders prefer working with homeowners to find solutions rather than proceeding directly to foreclosure. Furthermore, some lenders are willing to waive late fees or even pause credit reporting for borrowers experiencing financial hardship.
The reality is that most lenders will try to understand your situation if you approach them with honesty. Correspondingly, waiting until you’ve missed multiple payments can significantly reduce your available options. By initiating contact before you fall too far behind, you demonstrate responsibility and good faith.
Preparing before this conversation is equally important. Gather all relevant financial documentation, including income statements and expense records, to present a clear picture of your situation. Afterward, follow up with a written summary of what was discussed to maintain a paper trail.
Options your lender may offer
Upon discussing your situation, your lender might propose several alternatives:
- Forbearance plan – Temporarily pauses or reduces your mortgage payments for a set period, typically for homeowners facing short-term hardship. Your lender will contact you 30 days before your forbearance period ends to discuss repayment options.
- Repayment plan – Allows you to catch up on missed payments by adding an extra amount to your regular monthly payments to bring your mortgage current.
- Loan modification – Permanently changes your interest rate, loan term, or both to make monthly payments more affordable. This option works best for long-term financial hardships such as disability, death of a family member, or significant increases in housing costs.
- Short sale – If you owe more than your home is worth, your lender might agree to let you sell the property for less than the outstanding loan balance. This option is preferable to a foreclosure sale for both parties.
- Deed in lieu of foreclosure – You voluntarily transfer ownership of your home to the lender in exchange for release from your mortgage obligations.
Can I sell my house while in forbearance?
Yes, you can absolutely sell your house while in forbearance. Undeniably, selling your home during this period follows a similar process to any standard home sale, with some key differences.
The primary factor affecting this process is your home equity. According to CoreLogic, the average homeowner gained approximately $51,500 in equity during the second quarter of 2021. With positive equity, you can sell your home like normal, using the proceeds to pay off your missed payments and the remaining mortgage balance.
Henceforth, if you decide to sell during forbearance, it’s essential to understand that you’ll still be responsible for repaying all missed mortgage payments from the sale proceeds. Likewise, you must alert your real estate agent about your forbearance status to ensure a smooth closing process.
For homeowners needing a fast, straightforward solution, selling to a cash buyer like Senna House Buyers offers distinct advantages. Namely, you can avoid the lengthy traditional selling process while ensuring you have funds to resolve your mortgage situation quickly.
Remember that forbearance doesn’t eliminate your mortgage payments but merely postpones them. Consequently, selling your home might be the most effective way to avoid foreclosure and achieve a more favorable outcome for both you and your lender.
Step 3: Choose the Right Selling Method When You’re Behind on House Payments
Selecting the right selling method plays a crucial role in your success when selling a home while behind on payments. Your choice should be based on your timeline, equity position, and comfort level with the selling process. Let’s explore your options.
Selling with a real estate agent
Working with an experienced real estate agent is often the best choice when you have sufficient time before foreclosure proceedings advance. Above all, real estate agents typically achieve 10% higher sale prices than average.
A knowledgeable agent offers several advantages:
- Professional handling of negotiations and paperwork
- Access to Multiple Listing Service (MLS) for maximum exposure
- Expertise in pricing and marketing strategies
Yet, this approach comes with considerations. First, agent commissions typically range from 5-6% of the sales price. Second, the process takes 30-60 days on average. Finally, it requires time for proper marketing and showings, which may not be ideal if foreclosure is imminent.
For sale by owner (FSBO)
The FSBO route works best when you have strong knowledge of local real estate market conditions and sufficient time to handle all aspects of the sale. Throughout this process, you manage everything from marketing to negotiations.
FSBO can save on commission fees but requires significant time investment and market knowledge. Frankly, the risks include potential pricing errors that could cost more than agent commissions, legal complications without professional guidance, and limited marketing reach compared to MLS exposure.
Selling to a cash buyer like Senna House Buyers
Cash buyers offer the fastest path to closing, making them ideal when facing imminent foreclosure. In essence, cash home buying companies purchase homes using their own funds.
The benefits are substantial:
- Closings possible in 7-14 days
- No financing contingencies or buyer loan delays
- Minimal seller effort required
Despite offering 70-85% of fair market value, cash buyers provide a dependable selling process that gets you a cash payment quickly. Overall, they’ll help you sell rapidly and easily, providing more financial stability.
Can you sell a house if you are behind on house payments?
Yes, you absolutely can sell your house if you’re behind on payments. As long as your home hasn’t been officially foreclosed on, you still have the opportunity to sell it. In short, taking quick action is crucial to prevent foreclosure and alleviate financial stress.
The process depends on how far behind you are and your home’s current market value. Provided that your home is worth more than what you owe, selling can be a straightforward solution. Otherwise, options like a short sale may help you avoid foreclosure and minimize financial impact.
Step 4: Prepare for the Sale
Proper preparation makes all the difference when selling a house while behind on payments. Getting your paperwork in order and understanding the financial implications will help you navigate this challenging process more effectively.
Gather financial documents
First and foremost, collect all documentation related to your mortgage. This includes your loan agreement, statements showing missed payments, and correspondence with your lender. You’ll need to request a payoff statement from your mortgage servicer that details the exact amount required to satisfy your loan, including any penalties and fees.
For homeowners pursuing a short sale, your lender will typically require:
- Proof of financial hardship
- Recent financial statements
- An offer letter from a potential buyer
- A hardship letter explaining your situation
Understand closing costs and fees
Closing costs for sellers typically range from 2% to 5% of the loan amount. On a median-priced U.S. home of $398,400, this translates to approximately $7,211. These expenses include:
Transfer taxes, which vary by location but are usually based on the sale price Title-related fees ranging from $1,000 to $2,500 Escrow fees typically between 1% to 2% of the home price
Amid these costs, selling to a cash buyer like Senna House Buyers can reduce many of these expenses, as they often cover closing costs and eliminate the need for agent commissions.
How to handle liens or second mortgages
Second mortgages and other liens must be addressed before selling your home. In fact, the title company will perform a search to identify all outstanding liens during the closing process.
Thus, when selling your home, you must either:
- Ensure sale proceeds cover both your first and second mortgages
- Negotiate with the second mortgage lender to accept less than what’s owed
Notably, the priority of liens determines who gets paid first from sale proceeds. First mortgages typically have priority over second mortgages and judgment liens. Throughout this process, remember that while foreclosure eliminates liens, it doesn’t eliminate the underlying debt.
Step 5: Know the Legal and Credit Implications of Selling When You’re Behind on House Payments
Understanding the legal ramifications and credit consequences is vital when selling a home with mortgage arrears. These factors directly affect your financial future even after the sale concludes.
Foreclosure timeline explained
The foreclosure clock typically starts ticking once you miss your first payment. Indeed, most lenders report late payments to credit bureaus after just 30 days. Following this initial period, lenders typically wait 90 days to begin the foreclosure process. Officially, the legal foreclosure process cannot start until you’re at least 120 days behind on your mortgage.
Once initiated, the foreclosure timeline varies by state, ranging from 6-12 months in some locations to potentially longer. Throughout this period, you still maintain your right to sell the property. Afterward, if foreclosure proceeds to completion, you’ll typically have at least 20 days to vacate the home.
Short sale vs. foreclosure impact
The credit implications between these options differ dramatically. A foreclosure can significantly decrease your credit score by 200-300 points and remains on your credit reports for seven years. Meanwhile, a short sale typically reduces scores by only 100-150 points with less long-term impact.
Besides credit impact, selling through a short sale offers you more control over the process. Alternatively, foreclosure is entirely lender-driven, often leaving homeowners feeling powerless. In addition, many lenders view short sales more favorably, potentially allowing you to qualify for a new mortgage within two years, versus waiting up to seven years following foreclosure.
How to protect your credit score
To minimize credit damage, consider these strategies:
- Sell before foreclosure completion to prevent the most severe long-term credit consequences
- Work with a cash buyer like Senna House Buyers to expedite the sale process, helping you resolve your situation before additional credit damage occurs
- Lower your credit utilization ratio immediately after selling
- Pay all other bills on time consistently
Moreover, remember that Washington State is a non-recourse state, meaning borrowers won’t be liable for collections on a first mortgage on a primary residence if there’s a deficiency. Henceforth, understanding your state’s laws regarding deficiency judgments is critical when evaluating your options.
Conclusion
Being behind on your mortgage doesn’t mean you’re out of options—it means it’s time to take the next best step. Whether you’re working through partial payments, dealing with an adjustable-rate mortgage, or exploring loss mitigation options, selling might be your cleanest path forward.
Talk to your lender. Review your monthly mortgage statement. Consider legal advice or connect with a HUD-approved housing counselor. But also look at what selling now could offer. In many cases, it’s faster and more empowering than waiting out a time frame full of uncertainty.
Senna House Buyers can buy your home as-is, helping you stop the stress, avoid foreclosure, and move on with cash in hand. We’ve worked with homeowners facing everything from overdue payments to natural disasters and can tailor a solution that fits your timeline and needs.
No judgment. No pressure. Just honest guidance and a real offer.
If you’re ready for a fresh start, we’re ready to help you take your next step. Get your no-obligation offer today.
FAQs
Can I sell my house if I’m behind on house payments?
Yes, you can sell your house even if you’re behind on mortgage payments. As long as your home hasn’t been officially foreclosed, you have the opportunity to sell it. However, it’s crucial to act quickly to prevent foreclosure and alleviate financial stress.
What are my options if I’m struggling and behind on house payments?
If you’re struggling with mortgage payments, you have several options. These include talking to your lender about forbearance plans, repayment plans, or loan modifications. You can also consider selling your home, either through a traditional sale, short sale, or to a cash buyer, depending on your situation and timeline.
How does selling to a cash buyer differ from a traditional home sale?
Selling to a cash buyer typically offers a faster closing process, often within 7-14 days. There are no financing contingencies or buyer loan delays, and minimal seller effort is required. While cash buyers may offer less than market value, they provide a dependable and quick selling process, which can be beneficial when facing imminent foreclosure.
What documents do I need to prepare when selling a house with mortgage arrears?
When selling a house with mortgage arrears, you’ll need to gather all documentation related to your mortgage, including your loan agreement, statements showing missed payments, and correspondence with your lender. You’ll also need to request a payoff statement from your mortgage servicer detailing the exact amount required to satisfy your loan, including any penalties and fees.
How is my credit score affected if I sell while I’m behind on house payments?
Selling your house when behind on payments can have less severe credit consequences compared to foreclosure. While late payments will impact your credit, selling before foreclosure can prevent the most significant long-term credit damage. A foreclosure can decrease your credit score by 200-300 points and remain on your credit report for seven years, while selling through other means typically has a less severe impact.