We're a month late on our mortgage payment, and my self-employed husband just had surgery and can't work for several months. We feel like our house payments are more than we can afford. We'd like to sell now rather than hanging on and going through a foreclosure. How much time do we have to sell?
Under federal laws that protect homeowners in foreclosure, in most cases, you must be over 120 days delinquent before the loan servicer can initiate a foreclosure.
Once foreclosure starts, there's no automatic deadline to sell the property. The amount of time before the foreclosure is complete depends on whether the process is judicial or nonjudicial, and varies among the different U.S. states. To get an idea of how long the process might take, read our articles about your state's process. You can find them by clicking your state's link in our Key Aspects of State Foreclosure Law: 50-State Chart. The longer the process takes, the more time you have to sell the property.
Because you say that your mortgage payments are more than you can afford, you might consider applying for a loan modification, which could make your monthly payments more affordable. If you want to apply for a modification, call your servicer and ask for a "loss mitigation" application. Also, your state might have a specific program that gives money to qualified homeowners so they can avoid foreclosure during a financial hardship.
If you decide you still want to sell, and you can't sell your house for the total amount owed, your lender might agree to accept less, in what's called a "short sale." To get approval for a short sale, like with a modification request, you'll most likely need to submit a loss mitigation application to your servicer.
For more information about how foreclosure works in your state and how long the process will take—or if you want to learn about possible defenses to a foreclosure in your situation, which could delay the process and give you more time to sell—consider talking to an attorney. To learn more about alternatives to foreclosure, like a modification or short sale, consider talking to a HUD-approved housing counselor.