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Options for selling home without owing the bank

March 8, 2019
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

My wife and I purchased our Cape Coral home 15 years ago, right before the spike and, later, drop in prices. We borrowed additional funds in 2006 for home improvements from the same bank we had our mortgage, and have made payments every month. We have decided to sell our home and move closer to our kids in Wisconsin. However, our mortgage and equity line are almost as much as the value of our home. With commissions and closing costs, we will likely owe the bank money out of our pocket, which we need for our move. Any advice?

-Stan B.

Dear Stan:

As real estate values have continued to strengthen since the 2010 collapse, more and more people have equity in their home again. However, there are many people in a similar situation to you where the mortgage on their property is very close to the value of the property. First, if you know of a buyer, you can save significant money by selling by owner. If you don't have a friend or neighbor ready to buy, then you will likely engage a Realtor, who typically charges a 6 percent commission.

You should contact your lender to see if, under the circumstances, they will work with you. They may allow you to proceed with a short sale, where the bank would be paid whatever the proceeds are, and to forgive the remaining amount. Or, they may refinance the amount you are "short." Another option may be to offer a Deed in Lieu of Foreclosure - in this situation you would offer to deed the property directly to your lender, in exchange for forgiveness of the debt. You would want to be sure you didn't have positive equity in your home prior to proceeding with this option. Of course, if the property is worth enough, you may be able to sell it with a Realtor, pay the mortgage and all costs, and still receive some money at the closing table.

You will want to check with a trusted Realtor to determine the real value of your home, as well as the exact amount still owing. Depending on the calculation, there could be several ways to proceed without your family having to be out of pocket money when you sell your home.

Eric P. Feichthaler has lived in Cape Coral for over 30 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 17 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.



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