Can I Sell My House While in Forbearance in Colorado

Are you struggling to make ends meet after losing your job or having less income? Are you worried that you won’t be able to make your house payments and don’t want the stress of possible foreclosure?

Well, what if I told you there is hope and that selling your home could be one option. But what if you’re in forbearance because of financial hardship?

Read on for a comprehensive look at how to go about selling your Colorado home while still under a forbearance agreement with your lender.

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“Within hours after submitting my home information on their site I got a call back and an offer to my house. I ended up selling the house 2 weeks later. Thanks for taking the time to listen to my concerns and guiding me through this stressful time in my life.”

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Aurora, CO

Can I sell my house while in forbearance in Colorado? The short answer is yes, you can sell your property during forbearance if you choose to.

Can I Sell My House While in Forbearance?

What Is Mortgage Forbearance?

Mortgage forbearance is a temporary relief agreement made between a borrower and their mortgage lender. This arrangement allows the borrower to either lower or pause their monthly mortgage payments for a set period of time during financial hardship.

It’s important to note that forbearance is not loan forgiveness; borrowers are still obliged to repay the missed or reduced payments in the future, as agreed upon with their lender. The specifics of the repayment may vary depending on the terms agreed upon.

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Centennial, CO

Can I Sell My House If I Am in Forbearance?

Indeed, it is entirely possible to sell your home while you’re still in the forbearance program. The proceeds from the sale can be used to pay off the remaining balance of the mortgage, including any outstanding payments that have accumulated during the forbearance period.

However, it’s crucial to keep in touch with your lender throughout the selling process, ensuring you meet all requirements and obligations.

Should I Sell My Home in Forbearance?

Deciding whether to sell your home while in forbearance is a highly personal decision and depends on various factors. One of the key considerations is your long-term financial prospects. If you anticipate a substantial improvement in your financial situation that will enable you to manage your repayments after the forbearance period, selling your home may not be necessary.

However, if your financial struggles are more long-term, selling your home could potentially prevent a foreclosure and protect your credit score. You also need to consider the current real estate market. If property values have increased since you bought your home, selling it could yield sufficient funds to cover your outstanding mortgage and even provide some extra cash.

Lastly, it’s essential to discuss the matter with your lender and possibly a financial advisor. They can provide counsel based on your specific circumstances and help you navigate this complex decision. Remember, the ultimate goal is to find a solution that allows for financial stability and peace of mind.

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Pros and Cons of Selling Your Home While in Forbearance

Pros of Selling Your Home While in Forbearance:

Avoids potential foreclosure if financial hardship is long term.
Protects your credit score by preventing missed mortgage payments.
Potential to yield a profit if property values have increased.
Provides an opportunity to downsize or relocate based on changed circumstances.

Cons of Selling Your Home While in Forbearance:

May not be necessary if financial hardship is temporary and you can resume payments after forbearance.
The selling process can be stressful and time-consuming.
Potential tax implications from the sale proceeds.
Emotional impact of leaving your home and possibly disrupting family stability.

How To Sell Your House While in Forbearance

Selling your home while under forbearance is a process that requires careful planning and consideration. Start by contacting your lender to discuss the process and any potential penalties or fees associated with selling your home during this period.

Transparency with your lender is key in ensuring a smooth process. You’ll also need to reach out to a real estate agent experienced in such transactions who can guide you through the complexities of the housing market.

The second step is to prepare your home for the market. This includes cleaning, decluttering, and possibly staging your home to make it attractive to potential buyers.

You’ll also want to price it correctly, which requires analyzing comparable sales in your area. In some cases, you might need to consider a short sale, which means selling your home for less than the outstanding mortgage.

This requires your lender’s approval, but it may be a viable option if you’re facing significant financial hardship and the local real estate market is weak.

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How To Apply For Mortgage Forbearance

Applying for a mortgage forbearance can provide temporary relief in times of financial hardship. Here are the general steps you should take:

Contact Your Lender or Servicer: The sooner you reach out to your mortgage lender or servicer, the better. It’s important to do this as soon as you know you’re unable to make your mortgage payments.
Prepare Your Information: Gather all your financial information, including details about your monthly income and expenses, your most recent mortgage statement, and the reasons why you can’t make your payment.
Submit a Forbearance Request: You’ll need to make a formal request for forbearance. This process varies depending on your lender, but you may be able to apply online, by phone, or by mail.
Review the Terms: If your lender approves your request, review the terms carefully. Understand when you’ll need to start making payments again and whether you’ll be required to pay all missed payments at once.
Keep Records: Keep all correspondence from your lender and any documents related to your forbearance for future reference.

Remember, forbearance is a temporary solution and it’s crucial to have a plan in place for when the forbearance period ends. You’ll still be required to eventually pay back any missed or reduced payments.

Other Possible Options To Consider

Mortgage Refinance:

Mortgage refinance is a financial strategy used by homeowners to replace their current mortgage with a new one. This can be particularly beneficial if the new loan has a lower interest rate or more favorable terms.

It can also extend or shorten the term of your loan, or switch between fixed-rate and adjustable-rate mortgages. Under the right circumstances, refinancing can provide significant financial advantages including potential savings on monthly payments.

Loan Modification:

A loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three.

This strategy can provide relief for property owners who are struggling to make their current mortgage payments and aim to avoid foreclosure.

Mortgage Repayment plan:

A mortgage repayment plan is a strategy that helps borrowers catch up on missed payments by spreading the overdue amount over a certain period. Borrowers continue to make their regular monthly payments, with an additional amount added to cover what’s overdue.

This allows the borrower to gradually repay their missed mortgage payments while staying current on their ongoing payments. This plan is beneficial for those who have experienced a temporary financial setback but have regained their financial stability.

Loan Reinstatement:

A loan reinstatement is a strategy used by homeowners who have fallen behind on their mortgage payments, but are now able to catch up. It involves paying the entire overdue amount in a single, lump-sum payment, including any late fees or penalties.

This method effectively brings the mortgage back into good standing, eliminating the risk of foreclosure.

The Bottom Line

Even though selling a house while you are still in forbearance is possible, you should keep a few factors in mind. One of the most important aspects to consider when selling quickly is pricing your property competitively.

Make sure your pricing reflects current market values, as this will make it attractive to potential homebuyers making it a lot faster to sell your property.

Are thinking about selling your property that’s in forbearance?

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FAQs about can you sell your house during forbearance

1. Can you sell during a loan modification?

Yes, you can sell your home during a loan modification but it has to be after the modification has been finalized.

2. Does mortgage forbearance affect credit?

No, a mortgage loan forbearance that has been approved by your lender does not affect your credit. However, if your lender does not approve the forbearance going forward it will affect your credit due to the missed payments.

3. When Does Mortgage Forbearance End?

Generally speaking, most mortgage forbearance programs end after six or twelve months but can go even longer.

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