Behind On Mortgage Payments In Milwaukee: Can You Sell?

Given the current state of the economy, it would not be considered uncommon for a Milwaukee homeowner to find themselves falling behind on mortgage payments on their house. There are many reasons why you might find yourself in this precarious situation, especially if you’ve recently lost a job or are dealing with a huge life change such as health problems. So if you find yourself falling behind on your mortgage, is it possible to sell your Milwaukee house? 

There are some solutions for homeowners who want to find someone to take over payments on their houses in Milwaukee or sell their house fast. Let’s take a closer look at your options before you need to worry about foreclosure or losing your house in Wisconsin.

How To Sell When You Are Behind On House Payments In Milwaukee

model house on top of calendar with past due mortgage statement underneath

Option 1: Strategic Default

The strategic default strategy is simple. You walk away from your mortgage without making another payment. That’s it. You just stop making payments and let the bank know you’re walking away from your home and their loan. Sometimes, homeowners can see this as the simplest option because it feels better to walk away from their house and start fresh rather than continuing to throw money away at a bad mortgage. Of course, this is an easier solution for those with a lot of cash on hand who are able to take the equity hit that comes with losing all that property value.

There are concerns by going this route, of course. You have to find new housing without having any extra funds from the sale of your Milwaukee house. Perhaps most importantly, strategic default will be reported to credit agencies as a foreclosure, which will negatively impact your credit for years to come. That’ll make it extremely hard to get a good mortgage loan the next time around. We would consider a strategic default a last-ditch solution. 

Option 2: Deed in Lieu of Foreclosure

Like with strategic default, a deed in lieu of foreclosure means that the homeowner hands back ownership of the residence to the lender or bank. What makes it different to strategic default is that you are quite literally handing the keys back to the bank. The term “jingle mail” is what some people use to refer to it when you put the keys in an envelope and send them back to the lender for good.

The big benefit of using this solution to your situation is that you avoid foreclosure proceedings. That also means your credit score won’t take as much of a hit as it would if you went into foreclosure. Deed in lieu of foreclosure releases the homeowner from being personally responsible for the remaining loan amount. Lenders will often say they prefer this method as well since it means they don’t need to deal with the foreclosure process, which can be costly and time-consuming for them. This process also lowers the risk that the borrower will do any damage to the home or declare bankruptcy before closing the loan, both of which cause headaches for the lender.

Of course, you still have to deal with the negative credit impact of not paying back the loan in full, but at least you can walk away in a little better shape than a foreclosure or strategic default. We think there is a better solution that can help you avoid negative credit impact, but it’s a possibility to consider. 

Option 3: Short Sale

One way that many people get out of an underwater mortgage by attempting a short sale on your Milwaukee house. By definition, the proceeds from the sale of the house on the open market fall short of the total debt owed. Because of that, you’ll have to get the lender’s approval in order to do a short sale. It might seem strange for the bank to agree to get back less than the full value of the loan but, as previously mentioned, it’s still better than the costly foreclosure and financial recovery process that lies ahead if you default on the loan. 

The other requirement of a short sale is that the agreed-upon sale price is at or less than the appraised value of the home. That number will be set by the lender, which means you’re not going to be able to set the terms based on your outstanding loan amounts. The sale’s value is set at whatever the home is actually worth, so you won’t be able to get creative. Just know that your lender may hold you responsible for the difference between the sale price and the whole mortgage value, which means you’ll still be on the hook for the difference. Because of that, the short sale might seem like a better solution than it actually is because you may still need to make payments that you can’t keep up with.

Option 4: Consider Assumable Loans

An assumable loan means that you are able to transfer the mortgage to another person. In other words, this new person or company can assume responsibility for the mortgage. It’s important to know that not all mortgages are assumable loans, so you’ll need to confirm if that’s the case for you. Usually, if you have an FHA or VA loan, there’s a chance it can be assumable.

You can’t just hand over an assumable loan, however. The lender is going to want to make sure the mortgage is being transferred to someone who can make a good-faith effort to get caught up on payments and ultimately pay off the loan in full. So the new borrower will be required to qualify for the loan. The lender will figure this out the same way they made sure you qualified, by looking at the borrower’s credit score and debt-to-income ratio in order to figure out the likelihood of their ability to repay the mortgage. The process isn’t very different from the one they’d go through if the person or company were applying for a new loan. 

The big thing to know when considering this solution is that the lender will make sure you are still a responsibility for payments and the loan until they are satisfied the new buyer is capable. So if you’re concerned you won’t be able to find a credible buyer to take over the loan, don’t waste your time. This is a solution that Cream City Home Buyers may be able to help you with so make sure to discuss this potential option when you contact us. 

a man beside a for sale sign with a house background because he's behind on his mortgage

Option 5: Sell Your Milwaukee House As-Is

Rather than trying to satisfy the lender or bending yourself into a pretzel trying to find a solution, you can sell your house as-is to a cash buyer like Cream City Home Buyers who will take over so you don’t have to worry about making payments anymore. We buy homes like yours at a fair price, put cash in your hand quickly, and then fix up the house to sell it ourselves. This way, you don’t have to worry about making payments or defaulting on the loan, you don’t have to prepare the house to sell on the open market, and you don’t have to worry about your lender coming after you or your credit score taking a huge hit. 

The entire process can be completed in a matter of days, which means you’re able to move on from this stressful situation without incurring any further penalties or fees. Plus, you don’t have to worry about foreclosure or the bank coming after you. Ultimately, the bank doesn’t care how it gets its money, it either wants the property back or it wants the money to cover the outstanding loan debt. 

Let Cream City Home Buyers help you get out of your financial situation, put cash in your hands, and help you get back on track. 

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