Selling Home When Behind on Payments

Are you facing the daunting possibility of selling your home while being behind on payments? It’s a situation that can bring stress and uncertainty into your life, but worry not – we’re here to guide you through this challenging journey. Selling your home when behind on payments may seem like a challenging task, but with the right approach, it’s entirely possible to navigate these troubled waters and come out ahead. So, let’s dive in and explore your options in this crucial decision-making process.

Selling Home when Behind on Payments

Assessing Your
Financial Situation

When you’re in a tough spot with your mortgage, it’s essential to take a step back and assess your financial situation. This involves:

Reviewing Mortgage Terms

Understand the interest rate, your monthly payment amount, and any extra fees for late payments.

Calculating Total Debt

Consider all your debts, not just mortgage arrears. Including credit card debt, car loans, and personal loans.

Identifying the Severity of Arrears

Determine how serious your arrears are, as this will influence your choices.

Seeking Professional Advice

Consult with financial experts or credit counselors who can provide expert guidance tailored to your situation.

Why Planning Matters

Selling a House with a Lien

Planning is a crucial step in addressing financial challenges. It ensures that your solutions are well thought out and comprehensive. When you’re dealing with mortgage arrears, planning helps you:

Avoid Repetition

Ensure your solutions don't overlap or leave any gaps.

Create a Strategy

Develop a well-structured plan to tackle your mortgage arrears effectively.

Exploring Available

There are several options available to deal with mortgage arrears. Let’s explore them:


Consider replacing your current mortgage with a new one that has better terms. This can lower your monthly payments, making them more manageable. However, it might not work if you’re significantly behind on payments.

Loan Modification

Discuss changing the terms of your existing mortgage with your lender. This can lead to lower interest rates or an extended loan period, making your payments more affordable.

Selling to
Settle Debt

Selling your home to settle your debt is a viable option. It allows you to use the proceeds from the sale to pay off your mortgage arrears and other debts. However, it’s essential to target a quick sale to prevent further financial strain.

Short Sale

In a short sale, you sell your home for less than what you owe on the mortgage. Your lender agrees to accept the sale proceeds as full payment, even if it’s less than your total debt. This can help you avoid foreclosure and limit the impact on your credit.

Selling Home to Avoid Foreclosure

Deed instead
of Foreclosure

This option involves voluntarily transferring ownership of your house to the lender in exchange for them canceling your mortgage debt.  While it’s not ideal, it can be a more amicable solution than foreclosure.

Selling to Pay off
the Mortgage

Targeting a Quick Sale

When you decide to sell your home, it’s crucial to make it as attractive as possible to potential buyers. Ensure your house is well-maintained, decluttered, and staged effectively to increase its marketability.

Negotiating with Lenders for a Payoff

Before selling, negotiate with your lenders to determine the exact amount needed to pay off your mortgage arrears. This will give you a clear goal to work towards.

Protecting Your Credit

Protecting your credit is vital during this process. A significant financial setback like a foreclosure can have a lasting impact on your credit score. Therefore, it’s essential to explore options that allow you to settle your debts and protect your credit rating.


In challenging financial times, selling your home when you’re behind on payments can be a lifeline. By assessing your financial situation, understanding the MECE principle, exploring available options, and protecting your credit, you can regain control of your finances and secure a brighter future.

Now that you have a comprehensive understanding of the topic, you’re better equipped to navigate this difficult situation and make informed decisions regarding your mortgage arrears. Remember, seeking professional advice and acting promptly is key to resolving your financial challenges.