Being underwater changes the answer
If you owe more on the mortgage than the home is worth, you are underwater. We will tell you plainly: a cash sale to us usually will not work in that situation, because our offer would not cover the payoff. We would rather say that in the first phone call than waste three weeks of your time.
That is not the end of your options. It just means the useful ones are different.
Short sale
A short sale means selling your home for less than you owe, with the lender's approval to accept the reduced amount as payoff. It is a common answer for underwater homeowners who need to exit with limited credit damage. It does not automatically erase the rest of what you owe: the lender has to agree in writing to waive the deficiency, so make sure that waiver is in the approval letter. Forgiven mortgage debt can also count as taxable income, so ask a tax professional how it would land for you.
The catch is time. Short sales regularly take four to eight months. Lenders can refuse or counter offers, and second lien holders can block the sale. If a foreclosure sale is coming, start as early as you can, ideally months ahead. A lender may postpone a sale while a short sale is under review, but it does not have to.
In some short sales we can be the buyer, if the lender approves our price. What a cash buyer adds is speed and certainty: a lender may approve a lower price knowing the sale will actually close.
Deed in lieu of foreclosure
A deed in lieu means voluntarily transferring the deed to the lender in exchange for being released from the debt. It works best when you have exhausted reinstatement, forbearance and modification, cannot afford any payment, and want to exit cleanly.
Lenders do not have to accept it. They often decline when there are other liens, when the property needs work, or when they believe they will do better at auction.
What we will actually do for you
We will look at your numbers honestly and tell you which bucket you are in. Before you choose any of these paths, talk to a HUD-approved housing counselor, whose foreclosure help is typically free, or to a North Carolina real estate attorney. We will point you to counselors, foreclosure defense attorneys, short sale specialists and bankruptcy attorneys when one of those is the better answer.
The one thing that makes every underwater situation worse is waiting, because the options that need months are the ones that disappear first.
Read the full foreclosure guide for all six options, or call us and we will give you a straight read on yours.
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