3 Ways to Save Yourself from an Underwater Mortgage

A couple getting a mortgage

Dealing an underwater mortgage is never pleasant. Many homeowners in Utah, Texas, California, or any part of the U.S. choose the easy and reckless route, which is to walk away. Whether you do it strategically or not, defaulting on your loan would compel your lender to file for foreclosure, which would ultimately hurt your credit.

To spare yourself the rigors of the legal process or the embarrassment of experiencing eviction, consider these options:

Sell it to an Investor

SkyBuys.com and other experts noted that they’ve met many discerning homeowners with an underwater mortgage who tell themselves, “I’m selling my house!” and offer their property to flippers. These legitimate investors buy properties as is, and they renovate houses and resell them for higher prices.

A flipper could be your way out of your bad mortgage. This buyer will pay you cold cash for your home without any out-of-your-pocket expense to sell it. The entire sale process can take about a week, helping you beat foreclosure filing and liquefy your unwanted asset in fast.

Settle with a Deed in Lieu

If you don’t want to pay your mortgage anymore and are willing to move out, request a deed in lieu of foreclosure from your lender. If granted, it means your lender forgives you for the unpaid amount and will try to recoup losses by reselling the house. Forfeiture of your deed, however, can still be damaging to your credit.

Initiate a Short Sale

This is when you sell your property to your mortgage provider for less than what you owe. If your lender accepts your offer, the deficiency balance on the loan will be reported to credit bureaus as being “charged off” or “settled for less than the full balance”. Either way, it will negatively affect your creditworthiness, but it gives you more control over the sale.

Sometimes, it’s better to let go of your bad mortgage and have a fresh start. Before you make any move, though, mull over the pros and cons of each option to get the most favorable outcome for your family.