How do you sell your house if you owe more than it's worth?

Asked By: Atalia Cuadrat | Last Updated: 8th April, 2020
Category: real estate real estate buying and selling
4.9/5 (33 Views . 30 Votes)
If you owe more than a house is worth and want to sell, but aren't sure what to do, here are six options.
  1. Stay and Pay. There are several reasons you might choose to keep making the payment on a house, even if you owe more on it than it's worth.
  2. Refinance.
  3. Get a Loan Modification.
  4. Go for a Short Sale.
  5. Walk Away/Foreclosure.

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Also question is, what happens if you owe more on your house than it's worth?

When you owe more money on your mortgage than your home is worth, your mortgage is considered to be underwater. No homeowner wants to be underwater. It can be difficult, if not impossible, to earn a profit when trying to sell an underwater home.

Additionally, can you sell a home you haven't paid off? The simplest way to sell a home you still owe money on is to sell it for more than what you owe. When the home is sold, those funds are used to pay the remaining balance on your loan and you can retain the remainder (if any) as profit on the sale.

Moreover, can I sell my house if I am in negative equity?

Selling your home when it's in negative equity will break your mortgage terms, will be expensive and should only be an option if you're in severe financial trouble. You will need your mortgage lender's permission to sell the property if you know you won't get enough from the sale to pay back what you owe.

How do you sell my house that is underwater?

  1. Option 1: Stay in your home and work to build more equity.
  2. Option 2: Refinance your mortgage.
  3. Option 3: Sell your house and use your savings to pay the amount you still owe.
  4. Option 4: Sell your home through a short sale process.
  5. Option 5: Foreclose on your home.

34 Related Question Answers Found

When should you walk away from your house?

6 Reasons to Walk Away From a Home Sale
  1. The house appraises for less than what you've offered.
  2. The home inspection reveals major problems.
  3. The title search reveals unexpected claims.
  4. The house will cost a fortune to insure.
  5. The deed restrictions are way too onerous.
  6. Work has been done without a permit.

What happens if I can't sell my house for what I owe?

If you sell your home, your mortgage's due-on-sale clause is triggered, giving your lender rights to demand full repayment of your loan. If your home is sold for less than you owed on it, your lender could demand the difference from you.

What happens if my house drops in value?

If the value of your home drops, making the amount of your mortgage higher than the actual value of the property, you are considered to have an “upside down mortgage". The decline in value of your home does not release you from the responsibility to pay the loan.

What is an upside down house?

An upside-down mortgage is simply a mortgage in which the owner owes more than the house is worth. If you can afford the monthly mortgage payments and don't want to move, being upside down may not have an immediate effect.

What happens if your home value drops?


When you owe money on your real estate, it can increase the impact of a loss of value. When a $550,000 house goes down to $450,000, it has lost 18.2 percent of its value. However, if you have a $400,000 loan on the property, your equity will go from $150,000 to $50,000 -- a loss of 67 percent of your equity.

How do you get out of a house that is upside down?

How to Get Out of an Upside Down Mortgage
  1. An upside down mortgage is one where the balance remaining on the loan exceeds the value of a home. If you have an upside down mortgage, then you actually have negative equity in the property currently.
  2. Sell the Home. The first option is to sell the home.
  3. Refinance the Loan.
  4. Settle the Debt.

How do you walk away from a house?

Three of the most common methods of walking away from a mortgage include holding a short sale, voluntary foreclosure, and involuntary foreclosure. A short sale occurs when the borrower sells a property for less than the amount due on the mortgage.

Can you refinance a house that is underwater?

The main way to refinance your mortgage if you're underwater is through a government program called the Home Affordable Refinance Program, or HARP. Most lenders offer this program through Fannie Mae and Freddie Mac. The mortgage must have been originated on or before May 31, 2009.

Does negative equity hurt your credit?

He also points out that, just because you get into a negative-equity situation with your car loan, it won't necessarily affect your overall credit score, but it could affect your purchasing power, and it could impact the auto loan rate you get for your next loan.

How do I know if I'm overpaying for a house?


Here are the biggest signs you're overpaying on a house:
  • The listing price is drastically different from other comparable homes in the same or a similar neighborhood.
  • The home has spent a long time on the market.
  • The home has hidden maintenance or foundational problems you didn't know about.

How do I get out of negative equity?

How do you get upside down?
  1. Small down payment. The quickest way to have an upside-down car loan is to not make a down payment when you buy it, or to put only a small amount down up front.
  2. Add-ons.
  3. High price.
  4. High APR.
  5. Taxes and fees.
  6. Long loan term.
  7. Negative equity from your former car.
  8. Pay it off.

What happens if your house goes into negative equity?

Negative equity is the term used to describe your financial situation when the current value of your home is less than the amount you have outstanding on your mortgage. You would be in negative equity because you would owe the bank more than you would get if you sold your property.

How does negative equity work on a house?

Negative equity occurs when the value of real estate property falls below the outstanding balance on the mortgage used to purchase that property. Negative equity is calculated simply by taking the current market value of the property less the balance on the outstanding mortgage.

How much my car is worth?

The result is a clear picture of what your car is worth, or how much you should pay. You may pay less for a car with an accident, or more for a car without one. Only CARFAX gives you the VIN-specific price for every used car based on its history.

What do I do if I have negative equity?


So, to work out your equity, take the amount the property is currently worth, then subtract the outstanding loan on your mortgage - which will be the original price you paid, minus your deposit and repayments. If this amount is below zero, your property is currently in negative equity.

Can you sell a property for less than it's worth?

Selling a property at less than its market value
It's important to appreciate that should you sell a property at less than its market value, you are essentially 'gifting' the buyer a substantial sum.

When you sell a house do you get all the money?

Your Mortgage and Sale Proceeds
If you have a $300,000 mortgage, including the cancellation fee, and if you sell your home for $400,000, you've got $100,000 left. But you won't get to keep all this money, because you'll probably be responsible for closing costs and other expenses.