America’s Leading Cash Home Buyers

America’s Leading Cash Home Buyers

Wondering if you can sell your home if you’re currently in forbearance? You’re not alone, many sellers we’ve helped before you have been in this exact situation.

As home buying experts in Colorado, we’re going to provide the definitive answer, and walk you through some of the nuances involved to answer the question “can I sell my home if I am in forbearance”.

Let’s start with a summary, then we’ll head into some details…

In general yes, you can sell your home if you are in forbearance. No part of the agreement states that you must remain tied to the property. Any unpaid amount is simply added to the final payoff total, along with any unpaid interest and due fees. You may accumulate further interest.

This is at least the rule within the state of Colorado.

First, let’s take a look at what forbearance actually is. It sounds like a scary thought but it’s actually a great tool to bring relief to your mortgage payment headache.

What is forbearance

Forbearance is when your financing partner (your bank or other licensed mortgage lenders) offers you the chance to pause your payments either completely or partially, for a set amount of time.

This is so you can begin to build up your cash flow and help reorganize your finances.

During this period there are usually protections in place to not add any additional fees, interest, or payments, but that does not always mean you won’t accumulate existing interest.

Having the option of forbearance might be better than the alternative … which is having to go into foreclosure and potentially losing your home – and raking up a bunch of unwanted fees.

You have spent a lot of time in your home, building it up, maybe even adding an accessory dwelling unit to it in recent years to improve the property value.

It would be a shame to consider that you are completely illiquid due to a circumstance that was out of your control.

So I can sell my property, right?

Essentially, yes. When your home is in forbearance, in most cases you can sell your home.

You’re not in default of your mortgage or behind on your payments, so if there were any restrictions based on that, they won’t hinder you from selling your home.

You will however have to pay back the forborne costs. This can usually be covered with the money made by the sale of your home (the next amount minus the original mortgage and other fees that can happen).

Then you are free to keep the remaining amount and have no further obligations.

Are there any programs out there to help with forbearance

The federal government, when they passed the CARES act, included forbearance relief on government loans such as Fannie Mae and Freddie Mac loans as well as FHA, VA, and other government-based mortgages.

There are even some instances that those with these types of loans can even consider refinancing to a lower rate while in forbearance so that they can have a smaller payment once they get back to their regularly scheduled payments.

Don’t worry though, many private lenders such as the banks would rather offer a way to recoup their losses than get into the business of trying to sell your home at a loss.

This means that, especially during difficult global economic periods, many private lenders have been offering their own assistance programs to help offer financial relief and support to those that need the time to recoup their finances and figure out their next move.

If you need to act now and simply want a quick sale, then there are ways that we can help. So contact us now and start a discussion regarding what you would like to do.

Is the program state-specific?

In most cases, there are no specific restrictions in place preventing you from selling your home. In the great state of Colorado, there are no restrictions either, and it is really based on any individual terms in place with your mortgage provider.

Even this can be checked easily if you know what to look for and what questions to ask. We can help you ascertain if there are any restrictions.

To be clear, you are not in foreclosure or behind in payments. You are not on the verge of losing your home, you are simply pausing payments for a set amount of time, with the full intention of resuming normal mortgage payments or making full payment upon the sale of your property.

Just keep in mind that selling your home through estate agents could also take some time, so factor that into your planning …and consider opting for a simple 3 step approach to resolve your situation.

  1. Talk directly with our property consultants about the details of your property
  2. Get a quick evaluation of your property and situation to determine an offer
  3. Receive the offer within 24 hours, and start the quick sale

Other financial aspects to consider

Going into forbearance might not be the exact relief that you are looking for.

If you’re going to the extended maximum period of 15 months in some cases, you might want to consider selling your property sooner rather than later …and why extend the agony further if you’re not able to recover from forbearance.

As mentioned earlier, selling a home can take a lot of time, and the marketplace does change, so there might be a reduced inventory, but often there can be a reduced list of buyers due to supply and demand, world events, and other uncertainties within the economy.

This means that you might have to consider the option of looking for all-cash offers to speed up the process but lose on getting a potentially higher offer …or wait several weeks (or months) while you go through the process of selling your home.

The state of Colorado has a lower average time to sell your home than on the national level at around 86 days, but that is only an average and that is then inclusive of three months minimum of being on forbearance.

This means you will have to pay back, or factor in the cost of at least three missed mortgage payments into your settlement, which, as you can see, can start to add up pretty quickly.

Should I sell my home in forbearance?

That question is different for every person.

IF you are on the path to getting out of forbearance and staying within Colorado then stay with your home, unless there are other factors that make you want to sell.

IF you’re simply in limbo and deciding what your next move in life will be, then one of those choices might be the opportunity to sell your home, while in forbearance.

IF you’ve decided to sell and you’ve been piling away the money, consider handling some minor and cosmetic repairs on your home so that you can easily improve the overall value of your property when it comes time to sell.

These repairs can include repainting your home (interior and/or exterior). Cleaning your storm gutters and replacing any damaged parts on your roof. At the very least, you might want to clean the windows.

Consider some front yard work to offer some curb appeal to your home.

Forbearance can be a helpful tool

Don’t be daunted or scared about the prospect of selling your home in forbearance. It is a privilege and a support option provided to you by your lender.

Also, if you are able to recoup the mortgage amount and pay back your lender faster, instead of being on forbearance, wouldn’t your lender be more prone to support this way of thinking and recoup their initial investment? 

Either way, this is not something to jump into lightly without some additional thought, and truly think of why you want to sell or if you must sell.

More forbearance help…

Here at Leading Home Buyers, we’re proud to have helped lots of people in our community sell their homes. Some of which while in forbearance, and we can do the same for you. We will sit down with you, try to understand your situation, and offer our very best solution to help you towards an easy and fair sale that brings you peace of mind.

Contact us today, we’re always happy to help anyone in Colorado considering selling their home. Or simply give us a call.