It’s common for the average person to take out a loan when purchasing property. Before taking out a loan, it’s crucial to plan out your finances and make sure you can afford the payments before agreeing to sign anything.
Unfortunately, unexpected events can affect our ability to pay back these loans. For those who have used their house as collateral, this could lead to your lender filing a lien against your property in Louisville, KY. This can affect your property’s market value and ability to sell the property. Here’s what you need to know.
What Is A Lien?
When you are unable to repay your loan, a borrower can file a lien against your property in Louisville, KY. This means that if you cannot fulfill what’s stated in your loan or contract, the creditor can legally seize your assets and use it as collateral to pay off your existing debt. Liens are used to protect a lender’s interests to ensure they have a right to your assets in case you go bankrupt or fail to repay your loan. Liens can be placed on different assets apart from real estate property, including your bank accounts.
Real estate liens can be both voluntary or involuntary. For voluntary liens, some lenders automatically put a lien on your property when you take out a mortgage to purchase the same property. The lien remains on the house until the mortgage is paid off. On the other hand, involuntary liens are when a creditor files a legal lien on your property because of non-payment.
Can I Sell My Property While It Has A Lien?
If your property is the subject of a lien, your lender will have to consent to have the house sold if you decide to sell it. The worst-case scenario is that the lien holder refuses to let you sell, seizes the property, and liquidates it to pay off your remaining debt. This can also have a negative effect on your credit score. However, this isn’t very common as most lien holders prefer to settle this though different means rather than foreclosing.
In most cases, lien holders would prefer to wait for a homeowner to settle their debt. One of these ways is by selling the property and using the proceeds from that sale to pay off their debt. This is the preferable choice as lien holders do not need to spend additional resources of going to court and filing a lien on the property.
Do Liens Affect My Property’s Market Value?
Generally speaking, most buyers on the market aren’t keen to buy a house with an existing lien, as this means they will have to pay the remaining lien on top of the price of the home and its hidden costs. That’s why most sellers clear their lien before listing the property.
Assuming a buyer is interested in taking over a lien, they will find it difficult to find a lender willing to provide a mortgage loan. Liens are part of public records, so smart real estate buyers and their attorneys do title searches to ensure a property’s title is clean.
In your case as the property owner, liens only drop your property market value if you’re expecting the buyer to shoulder the lien upon purchase. But if you’re planning on paying off the lien with the income from the purchase, then you can sell your property at market value.
However, time is of the essence when selling your property to pay off a lien. By listing your property at market value, there’s no guarantee that you can sell your property within days or a couple of months. And given that you might be under pressure to sell your property before your lien holder decides to seize your property, you might be pressed for time selling your property on the market.
Learn How Rylo Homes Can Help!
When time is of the essence and you need to sell your home in Louisville fast, Rylo Homes is your best solution. We are a cash homebuyer in Louisville, KY, and we can give you a fair cash offer for your home within 72 hours or less. After accepting our offer, expect us to transfer your money to you in as little as 14 days after accepting our offer.
On top of our fast and fair cash offer, we do away with the hidden costs of selling a home that chip away at your income. No hidden fees, commissions, repairs, and closing costs – we’ll handle all that so you can focus on handling your lien with the income of selling your home.
Get in touch with us today for a full cash offer within the next three days.