The process of selling a home can be long and complex. This process can be even more challenging when you owe more on your mortgage than the value of your home.
When you want to sell your Oceanside, California home, but have no equity, you may face a dilemma. It can be difficult to do something about your home, but you have several options available.
Learning More About Home Equity
Home equity loans allow homeowners to borrow against their home’s equity. The loan amount is determined by the difference between the current market value of the home and the homeowner’s outstanding mortgage balance. Home equity loans typically have fixed interest rates, whereas home equity lines of credit (HELOCs) generally have variable rates.
You can use a home equity loan to convert the equity you’ve built up in your home into cash, especially if you use the money to make home improvements that increase its value. Be aware, though, that you could end up owing more than your home is worth if real estate values decrease.
What Happens When You Have No Equity?
Negative equity is when the value of your property is less than the amount of the mortgage. It is often caused by falling property prices.
Selling your home is an immediate problem if you have negative or zero equity. If you don’t have savings to cover the difference between the value of your home and the mortgage, it might be difficult to move.
Remortgaging can also be challenging if you want to get a fixed rate or a cheaper deal. When a mortgage expires, most lenders won’t let people with negative equity switch to a new one. Instead, these homeowners will be placed on the lender’s standard variable rate (SVR).
Your Options When You Have Negative to Zero Equity
When you have zero to negative equity in your home, you have several options. These are:
Stay in your home
The cheapest way to deal with negative equity is to stay put while you slowly pay off your mortgage and wait for the property market to improve. As long as you continue to pay your mortgage each month, you won’t have to worry about house repossession and can slowly climb out of negative equity.
Increase your property value
Look at similar properties on the market in your area and arrange a few viewings to see how your home compares. There may be several enhancements you can make to your own home to add value. Fixing structural problems, replacing worn carpets, redecorating and installing more security measures are some of the ways to add value to your home.
Rent out your home
Renting out your property may be an option if you can’t afford to sell but must move. You can repay your mortgage with rental income until your property is no longer in negative or zero equity and you’re able to sell it. Renting out a property could cover your mortgage repayments depending on a number of factors, such as the local market, insurance costs, maintenance, and taxes.
Sell your home to a professional cash home buyer
Consider selling your house in negative equity if you’re in severe financial difficulty, since it will break your mortgage terms and will be costly. It can be used as a last resort, however, if you’re experiencing financial difficulty in negative or zero equity. Just remember that the mortgage lender must give you permission before you can sell the house.
Sell Your Oceanside House, Fast
If you are thinking of selling your home, we would love to provide you with a fast, free, and fair cash offer. We at Ignite Property Solutions, LLC can buy your Oceanside CA house now, regardless of its condition.
We aim to make your life easier or better in some way. This is done by purchasing your house as-is. Nothing needs to be cleaned, repaired, or disposed. We help homeowners who are in a bad situation so they can start over.
We would appreciate the opportunity to make you a cash offer on your house if you are motivated to sell. Get in touch with us by calling (760) 302-7700.
