3 Things You Can Do If You Can’t Make Your Mortgage Payments in Hawaii

Make Your Mortgage Payments

Are you facing challenging financial circumstances that seem to be beyond your control? Never expected to be in this situation? Feeling overwhelmed with an overbearing mortgage on top of today’s Covid stress?

No question – we are in difficult times and so many families are trying to figure out what to do. If this sounds like it’s describing you, then please resist the urge to bury your head in the sand. Eventually, you’ll have a much larger price to pay from your lenders and/or the government than if you take charge and handle your affairs now.

If a foreclosure is looming on the horizon, you’ll want to take control of the situation in order to avoid the long-term damage that this legal process can cause, both financially and emotionally. There are steps you can take to avoid foreclosure — we’ll go over 3 things you can do if you can’t make your mortgage payments in Hawaii.

Renting Your Property

Depending on the general condition of your Hawaii property, renting in order to at least cover your payments is one of the things you can do if you can’t make mortgage payments in Hawaii. This will, obviously, mean having to relocate somewhere else which has its own challenges (moving expenses, finding a place big enough for your family and near work that you can afford), etc.). You should also know that just because you’re renting out your property, you’re still responsible for maintenance, repairs, property taxes, and insurance. Hiring a property manager to find your tenants? That will cost about another 10%…..once they find and screen someone. In the meantime, your debt to your lender continues to grow — and, it goes without saying, finding a tenant right now is challenging.

It’s also unfortunately a rule of thumb that real estate in Hawaii generally doesn’t “cash flow”, meaning that in almost all cases the rent you can get doesn’t cover your mortgage payment. So while it may be appealing to rent out the property, at best you’re likely to just reduce the amount of debt each month further imposes…not eliminate it entirely, especially with last year’s regulatory crackdown on VRBO/AirBnB type rentals.

In a nutshell, renting out your property to get out of a delinquent mortgage rarely solves the problem, but if you’re not that far behind, can get a good tenant whose rent covers your mortgage, and you can find a cheaper place to live, then maybe this is a viable option.

Reach Out to Your Lender

Working together with your lender on a refinancing plan is another option to try if you can’t make your mortgage payments in Hawaii. You’ll need to advocate for yourself in this matter usually in the form of a ‘hardship letter’, as it may take convincing your lender that you are dedicated to doing everything within your power to uphold your financial responsibility but just can’t make ends meet at the moment.

If you’re going to try this option, don’t wait for them to come to you — be proactive and let them know about your current difficulties. By taking the first step, your lender can work with you to see if refinancing is an option for your specific financial situation.

Another option to consider approaching speaking about with your lender is a short sale. You see, when someone actually gets foreclosed upon, the bank (or other foreclosing entity like the government) can come after you for the difference owed, called the ‘deficiency judgment’. However, while the same could technically happen in a short sale, our team’s negotiator is skilled at getting these waived as part of the negotiation. No waiver? No agreement to the short sale terms – it’s usually that simple.

(What is a short sale? Read here….)

Selling Your Hawaii House

Selling your property on your own (as long as you have equity) is another option you can take if you can’t make your mortgage payments in Hawaii. While you could list your home with a local real estate agent or sell the property as for sale by owner (FSBO), there are three main concerns with these options when facing foreclosure.

The first being time — there are no guarantees on when a sale will take place if it does at all. You could go for 6 months without finding a buyer – it happens all the time. Secondly, the economy and local market conditions can change in a hurry (ex. virus shutdown), all while you’re trying to sell your home. And last, but hardly least, are the expenses involved when listing with an agent or as a FSBO. You’ll need to have the funds available to cover all of the associated costs, and unless your home is brand new, there will likely be repairs needed that the buyer will request (or outright demand). Consider also the inspections, appraisals, and any possible expenses for unknown issues discovered in the inspection (mold, electric or plumbing issues, etc.).

You’ll also have to cover the costs of marketing in either case. Should you have chosen to work with a real estate agent, you’ll be paying their commissions — no small sum in Hawaii.

No matter which option you choose to handle your difficult mortgage, it’s advisable to stay in touch with your lender instead of shutting them out. As with any relationship, communication is the key to success, so you’ll want to remain in reasonably close contact with them and keep them posted on all of the steps you take along the way. Understandably, they will be looking for actions from you that result in a quick resolution. For this reason, you may wish to consider the time and money-saving benefits of a direct sale of your property, which more often than not, takes place as an “as is” transaction (i.e. no repair costs needed) and doesn’t come with the agent fees or wondering whether you’d be able to find a buyer.

Are you ready to solve the financial strain you are under, avoid all of the headaches and costs of listing your home, and be assured of a sale, in a very short amount of time? The best thing you can do if you can’t make your mortgage payments in Hawaii is to sell it to Oahu Home Buyers directly! Learn more about how we can help you by sending us a message or giving us a call at (808) 333-3677 today.