Can’t Pay Your Mortgage Because of a Reduction in Income?
An unplanned reduction in income can occur for a number of reasons. Maybe you were forced to take a lesser paying job after a lay-off. Or your hours at work were reduced. Or your partner lost their job, and you find your income cut in half. Whatever the circumstances, a reduction in income makes it very difficult to stay current on your bills, particularly large expenses like your monthly home mortgage payment.
A reduction in income can sometimes result in you having to sell your home because you can no longer afford to make your mortgage payments. That difficult decision can be made even more complicated if you owe more on your home mortgage than your home is worth. It’s important to know that even if you are underwater on your mortgage, you still have options.
If you’ve experienced a reduction in income and are underwater on your home mortgage, a short sale can help you avoid foreclosure.
In a short sale, your lender agrees to let you sell your property for less than the balance you owe on your home mortgage. To qualify for a short sale there are criteria you must meet. Every situation is unique, but the general criteria are:
- You need to sell your home.
- You owe more on your home mortgage than your house is worth.
- You have a personal financial hardship that will prevent you from making future payments. Reduction in income is one type of short sale hardship.
If your income has been reduced and you need to sell your house, a short sale has benefits over foreclosure.
Whether you should do a short sale or let your property go to foreclosure depends on your situation. In most instances, a short sale makes more sense than foreclosure.
- When you want to obtain a loan to purchase a home in your new location, more opportunities will be available to you if you do a short sale.
- While doing a short sale will negatively affect your credit, there are many benefits to choosing a short sale over foreclosure.
- Contrary to popular belief, you can be current on your home mortgage payments and still do a short sale. In fact, if you are current on your mortgage through a short sale, you can qualify for an FHA home loan afterwards without any waiting periods. The same option will not be available following a foreclosure.
- You may qualify for cash incentives by doing a short sale rather than going through foreclosure.
- In Washington State, an underwater homeowner can lose their home to foreclosure to the first mortgage lien holder and still owe the balance from the second mortgage or other lien holders.
Washington Property Solutions has helped over 1000 Washington homeowners successfully avoid foreclosure and get a fresh start, with no out-of-pocket cost to you. You can trust us to take care of all the details.
Richard and his team did such a wonderful job in completing my short sale. The service I received was phenomenal. They responded very quickly every time I called. Everyone I dealt with was very professional and understanding.
Leyla, Tukwila, WA
Since every homeowner’s situation is different, we always recommend that you speak with a professional who can advise you on the legal and tax implications for your circumstances. This is particularly critical when reduction in income is involved in the sale of your home.
Washington Property Solutions offers FREE real estate attorney consultations as part of our service.
Call us at 425-381-2233 to schedule a free confidential consultation.