You Still Need to Pay Your Mortgage, Even if Your House is in Contract!
This is SO true with Sellers in a 'tough' situation and even with buyers that are also selling a home at the same time.
Just because the contract is signed does not mean the deal is done. You still need to close and fund. Until that happens, it should be 'business as usual' and that means making your mortgage payments every month.
Ok, that may not be the case in a short sale. Much of the time, that is exactly why the homeowner isn’t paying the mortgage – they don’t have the means to.
But a ratified contract doesn’t mean that it is sold. You and the buyer may still need to deal with inspections, negotiate repairs, and make sure the buyer gets final loan approval and actually closes the deal! Time on market, plus escrow, may extend over several mortgage payments.
The terms of your loan with the bank on your property require monthly payments. That nice bank representative you talked to seemed to nod umm hmm when you said you had an offer on your home. That does not mean you received the green light to stop making payments, just because the balance is due to be paid in full soon. Here’s why you’ll want to keep things on track:
Did your agent provide you with a estimated net sheet at the time of your listing? You may be expecting that amount after close of escrow. But you will need to subtract any missed payments PLUS late fees and interest, reducing your net amount.
If you are cutting it close on your equity, a number of late payments and the additional charges accrued could actually put you in the negative – especially if you don’t pay HOA dues, or taxes on time as well. Those costs will be backed out of your proceeds. This could result in you needing to bring money in to close OR even changing your status to short sale at the last moment. It won’t be likely the buyer will stick around while you start the short sale process with the bank.
And of course, missed payments will also negatively affect your credit. Be sure to communicate with your agent of your intentions up front, and during the transaction if things change from the original plan. Those types of surprises are never welcome for anyone.
Tri Valley real estate for buyers and sellers. Search for homes in Livermore, Pleasanton, and Dublin.
I can also help you in the surrounding areas of Alameda County and Contra Costa County
including Castro Valley, San Leandro, San Lorenzo, San Ramon, Danville, Brentwood and Mountain House
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