Selling your home is always stressful, but when you’re selling a home with negative equity, there’s another layer of pressure. Negative equity means that the mortgage balance that you owe is higher than the home’s current value. Because lenders require borrowers to pay off home loans with the proceeds from the sale, negative equity can complicate the sale process.
The good news is that you have options. At Professional Home Buyers, we buy houses in Wichita, KS, even when they are “underwater,” and make the process simple.
What Negative Equity Really Means for Sellers
You can end up with negative equity in your property for many reasons, including market downturns or taking out a high-interest or low-down-payment mortgage. Regardless of why it occurs, the financial considerations when selling with negative equity require careful planning because you’ll still be on the hook for the shortfall.
Smart Strategies for Selling an Underwater Home
If you’re underwater but current on your mortgage payments, waiting for better market conditions to sell for a higher price might be the best move. You might also consider renting out the property to generate income that can help reduce your debt.
If you have to sell, though, what are your options for selling a home with negative equity? Two of the most common are short sales and paying off the mortgage balance.
A short sale means selling the house for less than what you owe. This requires bank approval, which isn’t guaranteed and can take months to secure.
If the bank approves a short sale, you can walk away without any further obligations. However, it can put a negative mark on your credit report for up to seven years, and you’ll pay taxes on the balance that the bank forgives.
You could also bring cash to the closing to cover the shortfall. You won’t have to negotiate with the lender, and your credit stays clean, but dipping into your savings or taking out a loan can affect your credit, financial goals, and ability to borrow in the future.
Deciding between a short sale vs. paying off the mortgage balance really comes down to your lender’s policies and how much cash you have access to. If you don’t have time to wait for the market to improve and can’t come up with the money to pay off the loan, a short sale might be the only option for avoiding foreclosure.
That’s where cash buyers come in. Working with buyers who understand negative equity transactions often shortens the process and limits unexpected delays.
Other Options To Consider When You Have Negative Equity
Alternatives to selling a home with negative equity, such as renting the property or refinancing, may offer temporary relief but are not always long-term solutions. For many homeowners, selling remains the fastest path to financial stability.
Selling a home that’s worth less than what you owe doesn’t have to feel overwhelming. Professional Home Buyers in Wichita specializes in helping homeowners explore practical solutions and close efficiently before paying off the mortgage. Call (316) 686-7355 today to discuss your options and get a fair cash offer.