If you’ve come to an agreement with your lender and were able to postpone making mortgage payments temporarily, you are in forbearance. Although forbearance may be a way for you to avoid foreclosure, that doesn’t mean that it will resolve your financial situation once the period is over. Ultimately, your mortgage and any other bills will have to be paid. And depending on what forbearance agreement you were able to negotiate, you may be in a tougher situation once you have to start paying again. As a solution, selling a house in forbearance could put you in a less stressful situation. Below, we’ll cover more about forbearance in Vermont and what the selling process would look like while your mortgage payments are temporarily suspended.
What is Forbearance?
To start, let’s determine what is forbearance? Forbearance in Vermont is a temporary postponement of mortgage payments. This form of repayment relief is granted by the lender or creditor instead of forcing a property into foreclosure. The terms of forbearance are negotiated between the borrower and the lender. And the borrower is to have cause for repayment postponement, like financial difficulties due to a job loss or major illness. Ultimately, forbearance can be a helpful way to avoid foreclosure and get back on your feet. But once that time period is up, you’ll be responsible for repaying the delinquent payments.
What are the Forbearance Laws in Vermont?
Forbearance laws in Vermont suggest that if you’re not paying your mortgage, that you ask your lender for a forbearance. COVID-19 affected many Vermont residents and led to several homeowners asking their lenders to put off payments. If your mortgage is federally backed by Fannie Mae, Freddie Mac, USDA, VA, FHA, you should be able to get a no-interest, no fee COVID-19 forbearance if you’re experiencing a hardship. During the forbearance period, the servicer (on behalf of the lender) won’t initiate a foreclosure. However, in exchange, the borrower has to resume making payments at the end of the forbearance period, which involves getting current on the missed payments, including interest, principal, taxes, and insurance. That is unless you sell your house while in forbearance.
Does Forbearance Hurt Credit?
Forbearance itself shouldn’t impact your credit score. However, missing payments before you contact the lender and set up the terms of your forbearance could, more than likely, negatively impact your credit standing. For example, forbearance assistance offered to borrowers affected by COVID-19, which lenders report to credit bureaus as required by the CARES Act, will not cause consumer credit scores to go down. So just make sure you talk to your lender to find out your forbearance options before late payments harm your credit score.
House Selling Options for a House in Forbearance
Pausing your mortgage payments to put yourself in a better position financially sounds wonderful for the short term, but once that timeframe is over, how will you handle those extra expenses and get caught up? This is where selling your house may be a better option. If you’re in a good position in terms of equity, if you owe less than the property is worth currently, then there are profits to be made with a successful home sale. Even if you would only break even, selling your Vermont home may be the right thing to do for you and your family.
Currently, Vermont’s housing market is doing well and has seen a high demand for available homes. Since it’s a seller’s market, that’s excellent news for people in a position to sell and move into something else more affordable. You wouldn’t have to worry about making up those missed mortgage payments that were skipped while in forbearance. The mortgage company will get a lump sum at the home sale closing that will cover whatever you owe. And whatever is leftover will come to you – that is, after the lender is paid off, repair costs are paid, and other seller’s fees, realtor commissions, and closing costs are covered.
Ultimately, your house selling options in VT are entirely up to you. Below we’ll look at a few of the property selling options for a home in forbearance.
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Selling with a Realtor
If you have time to get your property ready because it’s in relatively good condition, you can list it on the open market. By hiring a good real estate agent, they will handle most of the selling process for you. But you’ll still want to get the house ready to be listed, which might mean making repairs, touching up paint, other upgrades to maximize curb appeal and hopefully resale value.
Once the home is listed, if you work with a full-service real estate agent, they’ll handle marketing and advertising. Hopefully, after a few weeks or months on the market, an offer will be made that you like, and you can start the closing process (escrow). But before you get too excited, you’ll want to keep in mind that there are real estate agent fees to be paid.
The average real estate commission in Vermont is 5.26%. For example, if you were to take the current median home sale price in Burlington, VT, which is $400,000, the agent’s commission would cost $21,040. Usually, there are two agents involved in a typical home sale.
- The seller’s realtor (also called the listing agent). He or she represents the home seller.
- The buyer’s agent. He or she represents the person buying the property.
Both sellers and buyer’s agents get paid a percentage of the home’s final selling price. This payment is called real estate agent commission and is split between the two agents. The home seller is responsible for paying the real estate commission of both the agent representing them and the agent representing whoever purchases their home. These fees can come as a surprise for some homeowners so this is something to keep in mind if you’re hoping to walk away from your home sale with a profit.
Selling By Yourself
To save on some of those agent commissions, you can elect to sell by owner instead. Otherwise known as FSBO (for sale by owner), is a way to save on listing agent’s commissions, but not a buyer’s agent if they use a realtor to represent them. Also, bear in mind that since you’re doing things on your own, it will be up to you to figure out a selling price, strategy, marketing plan, answer phone calls/questions, and handle all the paperwork. And that’s just the tip of the iceberg. You’ll still need to get your property ready to sell.
All that hard work for a potential savings of 2.6%. Which could translate to several thousand dollars, but the trade-off would be a lot of your time, money, and effort, all while you’re trying to find your next house and move.
Selling a House to a Cash Home Buyer
Another selling option would be to sell directly to a cash home buyer. There are several “we buy houses in Vermont” companies, but people don’t consider this option because of misconceptions people have about professional home buyers in Burlington and assume they’re not for them. Why would selling to a cash home buyer be a good solution? Well, there are several benefits to selling a house for cash. Mainly because they buy properties in as-is condition, freeing you from making any major repairs, renovations, or adding curb appeal. Also, you don’t have to use a realtor or list your house. You could sell directly to them and without agents involved with the process. Finally, the other reason selling to a Burlington home buyer is a good option, they can make you a cash offer for your home within 24-hours and close in as little as 7-days or longer if needed. No realtor commissions, no repair costs, no service fees, and closing costs are even negotiable. You can see how selling to a home buyer will save you several thousands of dollars and months of uncertainty waiting for your house to sell. This would be an easy way for you to sell your home quickly and find something else that would provide more financial freedom.
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Process of Selling a Home for Cash
How do you go about selling your house to an investor in Burlington, VT? Well, if you’re interested in selling a home for cash, first you’ll want to find a credible we buy houses in Burlington company. A local home buyer that comes highly recommended is Burlington House Buyers, they are a family-owned company that follows family values. They are also a BBB accredited business.
Next, you’ll want to make sure they are offering what you’re looking for. For example:
- No Repairs, no renovations, no cleaning
- A no-obligation cash offer within 24-hours
- An easy selling process
- To close on your schedule
- No commissions or service fees
After you verify that information, give the home buyer a call or fill out a form online to start the home selling process and to get a cash offer on your house. It’s that easy to sell your Vermont property.
Getting behind on your mortgage payments is never a good feeling. Forbearance is a temporary way for you to avoid pre-foreclosure or bankruptcy, but once that break in payments is over, you’ll need to be ready to make payments again. If you’re struggling to figure out how to make up for those paused payments, selling your house would be a good solution. But if you’re concerned, you’ll have to make costly repairs beforehand or would prefer to save on realtor commissions, selling to a local “sell my house fast Burlington” company would be extremely beneficial. If you’re in forbearance looking for solutions, contact Burlington House Buyers today and find out how you can sell your home quickly without the hassle or expense.