Option # 2 – Sell & Bring Cash to the Closing Table

Posted by Jeff Edmisten on March 4, 2010 // 1 Comments

Of the seven basic options when you are facing a default scenario on your home mortgage, today we are briefly discussing option number two.  That is when you owe more on your mortgage than the home is worth, you can sell the property and bring the difference in cash to the closing table to pay off the mortgage.

Unfortunately, for the vast majority of homeowners in a distressed property scenario, this very simply isn’t an option.  In the Fredericksburg real estate market, most homeowners who are upside down, are way upside down.  Out of all the short sales we have managed, it is very rare to see one where the difference between what is owed and the home’s current value is less than $100,000.  If someone had access to $100,000, they are probably making their mortgage payments on time.

But, in those rarest of instances, if the deficiency is small, and the homeowner knows they are going to lose the home eventually, they may be able to gather the cash to pay the difference, and just get out from under the mortgage.  Most times the cash is borrowed from a parent, a friend, or another family member.

We did have one short sale scenario, where the homeowner was current on the mortgage, but just needed to move.  The difference was going to be pretty nominal, something like $5,000 (relatively speaking.)  She had the cash, and was willing to pay it at closing.  So, this is an option, just not a likely one for most homeowners today who need to avoid foreclosure.

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