How to Get Out of a Mortgage Loan: 7 Pro Tips

A mortgage is a loan you typically get from a bank or some other financial institution in order to purchase a property. This is possibly the biggest loan that you will ever take out, and therefore it’s important to completely understand what you are signing up for. In this article, we will provide you with a step-by-step guide on how to get out of a home loan in case you are stuck in a bad deal or just want to do so in the future.  

So, you’ve decided it’s about time you get out of your mortgage and move on with your life. Congratulations! This is certainly a big decision, and it’s not one that should be taken lightly. Here we will provide you with some pro tips on how do you get out of your mortgage:  

1. Pay Off the Mortgage Loan

If you want to get out of your mortgage, there are a few things you can do. You can decide to refinance, sell your home, or make extra payments on your loan and those are not all the options available.  

Refinancing is when you take out a new loan to repay your old mortgage. This can be a good option to consider if interest rates have gone down since you got your original loan. People often do this to get a lower monthly payment and save quite a bit of money on interest over the life of their loan.  

Making extra payments on your mortgage every month is another option for paying it all off early. This will also give you an opportunity to save on interest fees and use it for other purposes. Try making biweekly payments instead of monthly if that’s easier for you to budget.   

No matter the option you choose, getting out of your mortgage can be a great way to both save money in the long run and become debt-free sooner.  

2. Sell the Property

Selling your home is another way to get out of your mortgage. If you sell the property for more than what you owe on your loan, you will not only have money to cover the loan but left some for other expenses you may have or invest it somewhere.  

In case you decide to do so, the first step is finding a real estate agent. You may want to skip this step and save some money but we advise you not to do so. A professional will help you list your property and help find more suitable buyers that may be willing to pay more. 

The second step is of course to make a house look more presentable for the potential buyers. This often includes making repairs, painting, and decluttering. The third step is setting a price. The agent you hired should help you with this as well, as it can give you a more realistic view of the subject. Finally, the last step is listing a home for sale.   

If everything goes smoothly you should be able to sell your house for a good price and not only cover all the costs of the whole process but have some left too.  

3. Look for a Short Sale

One of many ways to get out of a mortgage also includes a short sale. This is an option people who are struggling to make their payments and are worried about foreclosure frequently choose.  

A short sale is considered when you sell your home for less than the amount you owe on your mortgage. This is not really that easy of a process and can be time-consuming. The key thing to remember here is that you must speak to the lender and wait for them to approve this sale.

 Be sure to explain your financial situation and why you think a short sale is the best option for you. If they approve this process, you can then go ahead and hire a real estate agent. Try finding an agent that already has some experience with short sales as they will already know how to navigate this process. After this comes a listing of the property and negotiating with your lender about the outstanding amount.  

It’s important to mention that through this process you will likely not get enough money to cover your whole mortgage and still have a bit to pay after all of this is done.  

4. Make a Loan Modification Request

If you’re struggling to make your mortgage payments, you may be able to get relief by requesting a loan modification. A loan modification is an agreement between you and your lender to change the terms of your mortgage. For example, your lender may agree to lower your interest rate, extend the term of your loan, or forgive part of the principal balance.  

To request a loan modification, you’ll need to contact your lender and provide them with information about your financial situation. You’ll also need to submit a hardship letter explaining why you’re struggling to make your mortgage payments. Once your lender reviews your information, they’ll let you know if you’re eligible for a loan modification.  

If you get approved, you’ll need to sign a new mortgage agreement with your lender. Be sure to read over the agreement carefully before signing it. Once you’ve signed the agreement, make sure you keep up with your new payment schedule. If you miss a payment, your loan modification could be canceled and you could be at risk of foreclosure.  

5. Request for a Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is when the homeowner signs over the deed of the property to the lender. This is done to avoid going through the foreclosure process.  

The first step here is to contact your lender. You will most likely need to explain your financial situation and why you are unable to make your mortgage payments. You will also need to provide documentation of your income and expenses just so your lender can be sure your story is true.  

In deed in lieu of foreclosure, you can still negotiate the terms of the agreement. This includes the amount of money that you will owe the lender and the timeframe for the deed transfer. It is essential you get these terms in writing and check them once again before you sign anything.  

After the documentation has been signed, you will need to vacate the property. The lender then takes ownership of the property and sells it at a public auction to recoup their losses.  

A deed in lieu of foreclosure can be a good option for homeowners who are struggling to make their mortgage payments but don’t want foreclosure. Keep in mind that this agreement stays on your record for only 4 years as opposed to foreclosure which stays for 7 and makes it more difficult to get any loan in the future.  

6. Allow the Property to Go into Foreclosure

If you want out of your mortgage, a not so popular option is letting the property go into foreclosure. This can be a difficult decision to make, but it may be the only option for you if you are unable to sell the property or refinance your mortgage.  

Before you decide on this option, be sure to speak with your lender first. They may be willing to help you and you can work together on making a more manageable payment plan or some sort of modification that will allow you to keep the property.  

In case you are unable to do so and just want to start a foreclosure process, the first thing you should do is stop making your mortgage payments completely. It will take a couple of these missed payments for your lender to start a process and take your property in the end.  

7. Consider Refinancing

As we already mentioned, another way to pay off your mortgage early is for you to take out a different loan to cover the already existing one. Refinancing can be a good option if you have some equity in your home and looking not only to get a lower interest rate but a lower monthly payment as well.  

The first step in this process is to check your eligibility for it. There are a few things any lender will look at when determining whether or not you qualify. These factors include:  

• Your credit score- the higher your score is the better candidate you will be. Another thing your lender will offer you if they see you have a high credit is a low-interest fee because they will see this new loan as a low-risk investment.   

• Your employment history- if you have a steady job and income the better offer you will secure. They may require proof of employment, such as pay stubs or tax returns.

• Your current mortgage- lenders will take a look at your current mortgage to see if you have enough equity to qualify for refinancing.   

If this all goes smoothly and you are able to take out a new loan, be sure to first take care of the previous one and then use the remaining amount for whatever needs you have or try investing it.  

Now that we covered some of the ways to get out of the home loan, the last question you might have is – “how to get out of a mortgage with someone?” and the answer to this is quite simple. Your best shot at walking away from a joint mortgage is to talk to your lender and ask for an assumption or modification that would remove your name from the loan. If the lender won’t change the existing loan, your co-borrower will need to refinance a loan into a new mortgage or you both can choose to just sell the house.  

When Does Getting Out of a Mortgage Loan Make Sense?

There are a number of reasons why you might want to get out of your mortgage. Perhaps you’re facing financial difficulties and can no longer afford the monthly payments. Maybe you’ve found a new job in another city and need to sell your home and move quickly. Or maybe you just want to free up some cash so you can make some home improvements.  

Before you decide on any option we gave you, be sure to first think about whether or not you can afford the monthly payments. If you decide to pay off the loan early by making bigger payments this will not make much sense if you have to sacrifice everything else. On the other hand, if you just found a new job and have more money laying around paying a bit extra every month can be a logical thing to do.  

In another scenario, if you found another house you want to move into, it would make perfect sense to sell the current home and pay the previous mortgage. The money you have left can be used for a down payment on a new house or for some other purpose.  

In conclusion, getting out of a mortgage can be a good idea for many different reasons but in the end, it all depends on your personal situation and future goals.  

What are the Risks of Getting Out of a Mortgage Loan?

There are several risks associated with getting out of a mortgage loan. First and foremost, if you default on your mortgage, there is a risk of foreclosure. This means the lender will take your possession and sell it in order to recoup their losses. This can have a major financial and emotional impact on you and your family. Other risks include damage to your credit score, difficulty finding a new place to live, and increased stress levels.  

To prevent all of this, be careful when taking out a mortgage loan, and don’t settle for the first offer you get. It’s worth taking some time and weighing your options before getting into this long-term commitment.  

Bottom Line

Many people struggle to make their mortgage payments, so if that is the case for you as well, just know you are not alone in this. The good news is that you can get out of a mortgage and there are a few options available to you. While we cannot tell you which option to choose, we gave you a good understanding of how you can get out of a mortgage. The option you choose to go with should be based on your situation and not someone else’s experience. We suggest you hire a financial advisor to help you evaluate your situation and prepare you for a proper talk with your lender.