How to Sell a House If You Have a Subprime Mortgage

The increase of bad lending practices in the past decade and the recent decline in home prices has lead to many people being in homes they could never afford, but unable to sell the home and thus those people face foreclosure. It is possible to sometimes sell the house and leave the lender on amicable terms.

	Starting immediately, write a personal budget. Allocate every dollar of income to areas of outgo. You may find that you are wasting money on non-necessities. There are a number of eHow articles on writing a budget. (Shameless plug: I wrote an article on how to write a budget, and a similar article on how to do it with the help of Google Docs Spreadsheets.)
	Remember, pay necessities first. Always. Do not pay the house and not eat or have electricity. Do not pay the credit cards, but be late on the house.
	Find a real estate broker who has a lot of experience, including experience in slow real estate markets, and price your house to sell. Do not price your house based on what you owe, but rather, price your house on what you expect it to sell for.
	Call the bank that services your loan. Tell them the situation you are in. They do not want to foreclose on you, because if they do, they will lose tens of thousands, perhaps hundreds of thousands of dollars. Try to negotiate betters terms. If you can refinance into a fixed rate loan at a reasonable rate, do so.
	Gather information about sales in your area. A high quality real estate agent will be able to this for you. (Get him or her to run a CMA - comparative market analysis - for your area.) Figure out what an average home of your size is selling for.
	If you get an offer on the house that is less than you owe, then take the offer to the bank and tell them that you have an offer and you can sell the house (and avoid turning it over to them) if they will take the money as a "short sale without recourse". (If you do a short sale, but allow for recourse, then they will sue you later for the difference.) If they accept it, you're good to go.