There are other options not mentioned here as well, so it is in your best interest to consider all options, especially those outside the traditional real estate arena. I was in your shoes back in the early 80's and was forced to learn all I could to salvage my credit and keep my home from being foreclosed, which is why I know of other options not mentioned here.
Bottom line....check out all your options.
You received some great advice below. Your process will begin with actually determining the value of the property that you own. From that value, you subtract the loan amount owed plus the closing costs associated with the sale. I would expect the transaction costs to be about 10% of the value of your property. If the bottom line of this equation is positive, then you simply need to get an agent and get your property on the market.
If the balance of the above equation is negative, you have some decisions to make that will all have positives and negatives. First, you could simply write a check for the difference at closing and be done with this house. That is the easiset (positive) and has a positive affect on your credit score (positive), but costs money (negative).
Second, you can explore a short sale. This is basically an agreement made with your lender to accept less than what is owed on the property. This costs less money (positive), but will damage your credit report (negative) and may result in further tax obligations (negative) and can take some time to get completed (negative). If not carefully negotiated, you may also end up with a deficiency balance, meaning that you still owe the unpaid balance on the loan. However, short of writing a check, it is probably the least harmful option.
Thirs, you can do a transaction called deed in lieu of foreclosure. This is basically voluntary foreclosure. You deed the property to the lender and they close out your loan. Again, there is little out of pocket cost (positive) but even greater harm to your credit (negative) and the potential for a deficiency balance and tax consequences (negative).
Finally, foreclosure. This is never a recommended option and can haunt you for a very long time. It will have the greatest negative effect on your credit score, the deficiency balance will likely be the largest, and the bank can chase you for decades to collect. In Texas, if the lender is persistent, they can actually attempt to collect for up to 22 years if they file the right documents.
As someone else mentioned, an option which will help your cash position is leasing the home. While it does not eliminate your mortgage, it does provide at least some assistance in paying it. You may even find that you can lease your home and fully cover all of your ownership expenses (mortgage, interest, insurance and taxes). Once the market recovers (and it eventually will) you can explore selling your home at a price that covers all of your debt obligations.
Hope that you have learned a bit about your options. If you have a conversation with a local real estate agent, they should be able to provide more insight on each of these options in the light of the current conditions of your local market.
Keller Williams Dallas City Center
contact me via email or phone with the address and some specifics about the home (beds, baths, square footage, lot size, needed repairs, etc.). I'm pretty sure I have a quick solution that doesn't involve listing it for sale and waiting for a buyer.
I can be reached at 512-507-5864 or firstname.lastname@example.org.
Guy E. Gimenez
Investor / Broker
If you can't sell your home for what is owed on it you have a few options.
If you can prove a hardship, you can Short Sale the home and ask the bank to foregive the difference.
If you have the additional cash, you can sell the home and pay the difference at the closing table ( you won't be able to close if all liens can't be paid off)
You can do a deed in lieu of foreclosure (send the bank the keys).
Let the home go into foreclosure (stop paying the mortgage and they will eventually take it)
Rent the property out and sell it in a few years when the value has gone back up.
All of these options depend totally on your specific circumstances. You should seek the advice of a local real estate agent with experience in distressed properties.
Long & Foster Real Estate, Inc
Lehigh Valley Office, PA
If you owe more than your home will sell for, you may be looking at a short sale option. Why do you think your home is not worth what you now owe on it? You need a Realtor in your local market area to perform a CMA, Comparative Market Analysis, to see what your home is worth. What market are you in?
If your CMA shows that your home will not sell for the amount owed, you need to contact your Lender and begin negotiations and discuss short sale options.
If I can be of assistance in any way, please let me know. If you are in the Highland Lakes/Hill Country market area, please contact me, and I will be happy to help you with a CMA.
RE/MAX of Marble Falls