Question
We're a month late on our mortgage and my husband, who's self-employed, just had surgery and can't work for several months. We feel like our house is just more than we can afford -- we probably should never have bought it. We'd like to sell now rather than hanging on and risking foreclosure. How much time do we have in which to sell?
Answer
Get on the phone to your lender right away. There's no automatic deadline -- the procedures vary between different lenders in different U.S. states. However, the lender will start moving more quickly toward foreclosure once it sends you a default notice (usually after you're three months late on your payments), so don't wait around for that.
Your lender will probably tell you a date by which you need to find a buyer, close the deal, and pay the lender the amount you owe it. Or, if you can't sell your house for the full amount owed, your lender may agree to accept less, in what's called a "short sale."
Also start asking friends for recommendations for a good real estate agent to help you sell the property. Although you could, in theory, save on commissions (about 5%) by selling the house yourself, your lender will probably discourage this. A good agent can make sure that your house is priced to sell (without going too low) and is widely advertised.
If you're having trouble making your mortgage payments or already in jeopardy of foreclosure, see Nolo's Bankruptcy, Debt & Foreclosure Blog or the bestselling Foreclosure Survival Guide. More information on foreclosure and short sales can also be found in Nolo's Foreclosure section.
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