Moving somewhere affordable!

February 14, 2008 12:22 PM

Can I sell my place if I'm on a repayment plan for its mortgage?

I own a home, but have had trouble making payments on the mortgage--my parents talked me into buying it, but it's been too much to handle on my salary.

I worked out a payment plan with my lender to avoid foreclosure, and will be able to get things back to normal by May.

I'm planning to move across the country this summer, and want to list the place as soon as possible because I know the housing market's crap. How would this work if I'm not up on payments?

Also, my parents don't know that I've worked out a plan--this is a long story about family dynamics. They will be helping me to list the place, but I don't want them to find out what's happening. When will I need to come clean? When we have a buyer? Before I list it?

Thanks in advance.

posted by hamster to Work & Money (2 answers total)

Best answer: How much is your mortgage for vs. the price that you'll likely fetch at market? Is the price you think you'll get at market based upon current comps and taking into considering how your local housing market is behaving, or is it a guess? Are your parents going to ask for some commission for the listing?

If you're underwater, the payment plan will be the least important issue.

If you're significantly underwater, being on the payment plan might work to your advantage. If you want to consider a short sale, you're already in touch with your lender, and there's some strength to the tale that your file should be handed over to loss mitigation. That might get your lender to agree to a short sale more readily. If you just call them up and say, "Hey, I found a sucker who will buy my house for 100K less than I owe you, will you sign off on it? Oh, I need to know by tomorrow." they're going to say "we need to know all your financials first, we'll get back to you in a few weeks.

Since your parents are helping with the listing, if it's a short sale, they will know, but they likely won't know about the payment plan. They'll just know that you have to run offers by the bank/hit a number that a loss mit. officer has mandated you hit.

As it sounds like you're a recent purchaser, if you haven't refi'ed, it might be worth considering deed in lieu if you're deeply under water. However, when you don't list your house, I think your parents will catch on.

Your mortgage might have prepayment penalties of some sort, so you'll probably have to contact them for an exact figure of what you owe anyways, unless your house will easily fetch a value much higher than the loan is for. I would imagine their calculations take into account that you're a bit behind schedule.

If you're not underwater, then so long as the price for the house will cover the mortgage it shouldn't be an issue. The issue might be if your parents were intimately involved in the purchase and know how much the payoff "should" be.

If your parents are handling the banking or are your real estate lawyer, then they'll know. But my experience with homeselling is that our selling agent didn't need to know how much was on the note against our house, but that was in Ontario. I missed seeing where you said you were from - I imagine all states have local quirks.

(sorry if by assuming/explaining some potential pitfalls that you took offense. However, as you appear to be a recent buyer in a bubble market, and were goaded into it by famial pressure (I.E. might not have had your head wrapped around all of the details), I figured it was worth saying a bit.)
posted by nobeagle at 1:38 PM on February 14, 2008

I'm pretty sure the lender would much rather you sell the house than have to foreclose on you and sell the house themselves.

Other than that, we need more details. Most importantly, how much you owe on the house and an estimate of how much it will sell for.
posted by Dec One at 3:09 PM on February 14, 2008