One of the greatest aspirations of the American Dream is to own a home. If you’ve accomplished this milestone, you most likely bought your home with every intention of making each mortgage payment for years to come. However, life doesn’t always go as planned.
A mortgage loan can become financially burdensome, especially if a borrower is experiencing economic hardship. One thing leads to another, and suddenly you might find yourself behind on mortgage payments. Luckily, there are many ways to get out of your mortgage and enjoy some financial relief.
To discover six different ways you can get out of your mortgage, keep reading.
1. Sell Your House
One simple method for how to get out of your mortgage is to sell your house. The proceeds you receive from the sale will typically enable you to pay off your mortgage loan once and for all. Best of all, your credit score will remain unscathed.
Despite these benefits, selling a home can take a considerable amount of time, effort, and intricate personal finance strategies.
- Hire a real estate agent
- List your home
- Show your home
- Wait for an adequate offer
- Go through home inspections
- Negotiate repair requests
- Close escrow
Depending on the current housing market, this process could take a borrower anywhere from a few weeks to a few years! If you need to get out of your mortgage loan sooner than later, you may want to explore other mortgage refinancing options instead.
2. Rent Out Your Home
If you’re not ready to sell your home, you can also rent it out. While a borrower still technically has a mortgage, they may be able to cover their monthly mortgage payment with their rental income alone. Thus, this option for your existing mortgage can offer you the financial relief you’re looking for while preserving your status as a homeowner.
The primary downside of this method is that you’ll need to find somewhere else to live.
3. Walk Away and Accept Foreclosure
If you can’t afford your mortgage payments anymore, some people end up resorting to foreclosure. Once you stop making your monthly payment, you’ll eventually get foreclosed on and lose your home (though the legal process can take months, giving you some time to find new housing accommodations).
However, resorting to foreclosure is not recommended because this could get you into financial trouble and lead to some of the following consequences:
- You’ll be forced out of your home
- Your credit score may drop dramatically
- Your credit score rating may be affected negatively for up to 7 years
- You may have a harder time qualifying for another mortgage with mortgage lenders in the future
If you’re considering this option, you should let your mortgage lender or mortgage broker know that you can’t afford your mortgage payments anymore. They may allow you to temporarily pause or reduce your payments while you get back on your feet financially. In this case, there are plenty of tips on how to lower mortgage payments without refinancing. Another option aside from mortgage refinancing is that your mortgage lender may even be able to help you seek some sort of mortgage forbearance. However, as with foreclosure, there are pros and cons of mortgage forbearance.
4. Request a Deed in Lieu of Foreclosure
If you want to avoid foreclosure and its harmful repercussions, you can also get out of your mortgage by giving your current lender the deed to your home. This process is known as a deed-in-lieu of foreclosure.
If you’re interested in pursuing this option, you’ll need to reach out to your mortgage lender or mortgage broker to find out if they’re open to this arrangement. If they are, they’ll accept your home as your final mortgage payment and release you from the remaining home loan balance amount. You’ll have to move out so they can sell your home and recoup some of their money.
A deed instead of foreclosure may still harm your credit score, but not as much as a foreclosure would.
5. Short Sell Your Home
Short sales occur when you sell your current house for less than you owe on its fixed-rate mortgage. Thus, it causes you to come out “short” financially. By selling your home at a discounted price, a short sale can help you sell your home faster, especially in a slow housing market. In turn, it can help you avoid an imminent foreclosure. Although, you risk not making back enough profit to pay off your existing home loan amount.
You may only pursue a short sale if your current lender agrees to the loan modification. Once your home sells, you must give your lender all of the proceeds. Depending on your state, you may or may not be liable for the remaining mortgage balance.
Even though a short sale is less financially harmful compared to foreclosure, it’s still not an ideal option. It can harm your credit score and it requires just as much time and effort as selling your home for a higher price.
6. Choose EasyKnock’s Sale-Leaseback Program
So far, all of the methods we’ve mentioned require you to move out of your beloved home.
Wouldn’t it be nice if you could get rid of your current mortgage contract and remain in the home you know and love? With EasyKnock, you can.
This innovative sale-leaseback solution allows you to:
- Privately sell your home to EasyKnock, a home equity loan alternative, to pay off your mortgage balance (the sale process takes as little as two weeks)
- Receive up to 75% of your home’s value in cash upfront
- Rent your home and pay market rent for as long as you need
- Enjoy the option to buy back your home once you’re financially ready to take on a new loan and a fixed-rate mortgage again or have EasyKnock sell it on the open market so you can move to a new home and receive any remaining value
Becoming Mortgage Free Is Easy With EasyKnock
As you can see, there are many ways to get out of an unaffordable mortgage contract.
However, only EasyKnock lets you get rid of your current mortgage, continue living in your home, and improve your financial well-being by converting your home equity into cash. All without having to resort to mortgage forbearance or foreclosure.
Reach out to us today to learn more about this innovative sale-leaseback program.
The world of home loans and mortgages is complicated, to say the least, but it doesn’t have to be. To get more useful information, check out our blog. We answer any, and all questions on handling mortgages, including reverse mortgage, mortgage refinance or cash-out refinance, home equity line of credit, and how to get a second mortgage with bad credit. To learn more about all your options, talk to a financial expert today.
Investopedia. Foreclosure Definition.
Consumer Financial Protection Bureau. What is a deed-in-lieu of foreclosure?
Consumer Financial Protection Bureau. What is a short sale?