Short sale have proven to be the only way out for most home owners who’s mortgages are way more than the market worth of their houses. For those struggling borrowers, short sale gives them an opportunity to avoid fore closure.
Though helpful, short sale can be intimidating, time-consuming and stressful, that’s exactly why you might need an experienced short sale realtor to help you navigate the difficult decision of short selling your property in a hassle-free and seamless way.
I guess, for quite sometimes you have asked yourself how short sale process works and the possible after consequences. Well, you guessing time are over. For a moment forget about everything you know, or you have heard about short sale and let’s start from the basic.
- First consider a having a loan modification
Before moving forward with a short sale process, first try and talk to your housing counselor or lender about the situation at hand. You may be eligible for a loan modification hence avoiding the need of selling your home.
The federal Home Affordable Modification Program, a project run by the U.S. Department of Housing and Urban Development, may be an option. In case, you are eligible for HAMP, your lender or Mortgage Company will probably put you on at least three-month probation plan. This move gives you time to prove to the lender that you can make a timely payment with the new monthly payment level.
When you make it out of the probation, you might have a new mortgage payment and hence avoid forging ahead with a short sale plan. In case, your loan modification fails the next eligible step to make is to carry on with a short sale.
- contact your lender about a short sale
Talk to your lender about your plan of putting up your house for sale as a short sale property so that they can sign it off.
Before the lender sign off and agrees to your plan of putting your house on short sale, you must first show solid proof why short selling is the best option of clearing your pending mortgage. Notably, paper work such as bank information and bank statement, income statements, and asset disclosures are required by the lender when applying for a short sale. Furthermore, there are some qualifications you need in order to be eligible for a short sale. Below are some of the qualifications needed of you to carry out a short sale.
When you have fallen on a hardship: You must draft a letter of hardship to the lender explaining why you can’t continue paying the remaining mortgage balance. Hardship letter indicates that the seller is undergoing a financial hardship.
The following examples constitute a hardship: unemployment, bankruptcy, death, divorce, medical emergency/sudden illness etc.
Meanwhile the following reasons do not qualify as a hardship;
Bad or good purchasing decisions: Buying a personal car or setting up a business does not qualify as a hardship.
Purchasing another house: The lender does not give a damn if the house is no longer suits your family or you and in fact, in case you have purchased another house, you have zero chances of qualifying for a short sale.
Unhappy with the neighborhood: Even if half of your block is selling pot, smoking pot or playing loud music, all this does constitute as hardship to make you put your house for short sale.
Pregnancy: Deciding to start a family or increase its size I not considered a hardship.
Renting an apartment: Moving out of your house to a rented apartment is a lifestyle decision and cannot be considered as a hardship.
- Contact a real estate agent
When all the paper work is complete, of course, you will now need to contact a real estate agent to help you in making the sale as quick as possible. It is important to choose a real estate agent with vast experience in short sale properties.
- List your property
Like all other property sales process, your property will be listed by your real estate agent in an effort to attract a buyer. In an event an offer as been received from a buyer, it will be sent to your lender for review and verification. Negotiations will be made between your agent, buyer’s agent and the lender until an agreeable price is reached.
- Close the deal
If the purchase is approved by your lender then all is good. You can gracefully move out and the new buyer peacefully moves in. The money obtained from the purchase is used to pay off your mortgage debt. You can also click here to see more on the short sale process.