In the current real estate market, many families have homes that have lost all of their equity. In some cases, the property is worth less than they owe creating a negative equity situation. In a negative equity situation, you actually would have to pay to sell your house.
Neither of these positions is good if you need to sell your house in the current market. Many families that have to sell in a no/low equity situation feel they only have two options. You can either attempt a short sale or walk away from the property and take the foreclosure. In a short sale, you may be able to sell your home but even then, you are unsure if it will sell and what the bank will say. When a seller chooses to walk away from the home, then they face foreclosure, credit problems, and in some cases, the debt from the house may follow you even after the home is sold in foreclosure.
There is also a third option that many do not know about. The third option a seller has is to sell the house on a mortgage takeover plan. Now don’t be surprised if you haven’t heard of this because many people have not. Mortgage takeovers work by allowing a buyer to come in and take over from where you the seller left off. The buyer starts making payments on the home and they continue to make payments on the old mortgage while they have control of the house.
Now, I can see many of you sellers scratching your head. You are thinking what happens to my old mortgage? The answer is that the old mortgage stays in place and the new owner begins making the payments. This is somewhat similar to a mortgage assumption but not exactly. It is a great way to get out of your old home and mortgage payment. Now the downside is that you will not get any cash from the sale of your house. However, this house had very little or no equity so you weren’t getting cash anyway. In fact, your goal was to get out of this house and not owe money to sell it. This technique accomplishes that.
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