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Step-by-Step Guide: How to Legally Exit Your Mortgage

By The HomeGo Team On 2019-11-13

Did you know that according to Attom Data almost 625,000 homeowners filed for foreclosure last year?

If you’re facing financial difficulties, you’re not alone. Whether due to loss of a job, health issues, a divorce, or other reasons, many homeowners find themselves in the stressful position of wondering how to get out of a mortgage contract legally.

There are ways to legally get out from under a mortgage before resorting to foreclosure. Read on to learn about how to get out of a mortgage legally.

Default and Walk Away

Maybe the market in your region is sluggish. Perhaps you bought your home at the height of a price bubble or you’ve been unable to refinance. Whatever the reason, you may find yourself “underwater”; a.k.a. you owe more than your home is worth.

In many cases, it just doesn’t make sense to keep paying. Instead, you can default and walk away. Homeowners with financial means can find other accommodations, then simply abandon their mortgaged property. However, this likely is not an option for most Americans who do not have the disposable wealth required to walk away pain-free.

Speak with your bank first about your intentions; some lenders may offer a deed in lieu settlement. Be aware that defaulting on your loan will harm your credit.

If you can’t make payments and even have to declare bankruptcy, you’ll still be eligible to buy a home in the future.

Short Sale

In a short sale, you sell your home at a discount and negotiate an agreement with your lender to accept less than your mortgage balance. This allows you more control over the sale, but will still damage your credit.

As short sales become more common, the associated stigma and negative credit impact may decrease. Unfortunately, even if your lender agrees to a short sale, they may still try to hold you liable for the difference between the mortgage value and the sale price.

Deed in Lieu of Foreclosure

You may ask your lender to accept a deed in lieu of foreclosure. This binding legal document transfers ownership from you to your lender; in exchange, the lender releases you from the mortgage.

The lender then sells the property and keeps the proceeds. In some states, the homeowner may still be liable for the difference, so be sure to do your research before pursuing this option.


If you fall behind on mortgage payments, your lender may file for foreclosure. If the court agrees, the lender can take possession of or sell your home… and force you to leave.

For most homeowners, this isn’t a desirable situation, especially if you don’t have any alternative housing options. Plus, foreclosures harm your credit for years.

Sell Your Home

The least stressful way to get out of a mortgage legally? Working with a legitimate company that buys houses quickly.

You receive a below-market-value price, but don’t have to pay money out-of-pocket to sell your home like you would in a traditional sale. That means no real estate agent fees, no renovation costs, and none of the expenses associated with getting a home ready to show.

Plus, the process can be completed in about a week. Selling your home to a  home-buying company allows you to beat a foreclosure filing, resolve estate issues, or liquidate your assets quickly. The best part? With this option, your credit remains unharmed!

Hands down, this is the fastest way to get out of a mortgage contract legally.

Wondering How to Get out of a Home Loan? Rest Assured That You Do Have Options

When you’re in a situation where you need to sell quickly but don’t want to sink money into the sale, the best way to get out of a mortgage legally is by selling to a company. This way, you’ll get the most money for your home without damaging your credit.

HomeGo provides same-day offers and a fast closing process that takes just 7 days. We take care of the details, help with closing, and can even make offers on homes with title issues.

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The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.