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What happens if I sell my home for less than my mortgage?

We live in an era in which government shutdowns, layoffs, high medical costs and divorce can all financially cripple a family. While some lenders may be willing to extend a due date out for a few weeks or months, others may not. If you're struggling to make mortgage payments, then you may be considering downsizing your home. If the market is performing poorly or there's little equity built up in it, then you may be wondering what to do next.

Individuals who find themselves paying high monthly mortgage payments that aren't reflective of current market values are likely to struggle to sell their home for the amount that they owe.

The best case scenario is that if you're upside down on your mortgage, you'd have the cash on hand to be able to pay your lender the difference between what you sold the home for and what you owed. Most people don't have tens of thousands of dollars sitting around, though.

Instead, most borrowers in Ramsey end up having to negotiate with their mortgage company to do a short sale. If they agree to it, then it's going to hurt your credit score. While it's not going to hurt it as much as a foreclosure would as the lender will mark your balance as "paid in full," future creditors will see that your outstanding balance was "settled".If your lender isn't willing to do a short sale, then they may advise you that they're going to sell off the debt to a collection agency. If they do, then they'll likely sue you to recover what you owe. If you have the means to make regular monthly installments to pay down the amount left over between what you sold the house for and what was owed, then they may be willing to enter into a repayment agreement with you.

Once a Minnesota homeowner falls behind in making mortgage payments, lenders often quickly move to foreclose on a home. One of the best courses of action that you can take if you are struggling to make timely payments is to let your lender know right away to see whether they can offer options for staying in your home. An attorney can help you negotiate with your bank to avoid potential litigation.

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