Is a Short Sale right for you?

If you are struggling to pay your mortgage and you’re weighing your options, there are a few points to consider.  The lenders you are working with will evaluate ALL of these factors as they consider accepting any short sale offer.

  1. Are you behind in your payments?  Some will suggest to you that you need to be behind in your payments before they will consider a short sale offer.  Not necessarily true!  Each lender will have their own criteria and who is  holding your note may dictate how you are instructed to proceed by your lender.  Whatever you do, find out for yourself and not from someone you know who may have had a similar experience.
  2. Are you “underwater” in value?  We can’t decide for ourselves to “walk-away” from our legal obligation to pay our mortgage because the homes in our neighborhood have declined in value.  You should first find our whether or not the bank will consider a loan modification as a first step before you just consider walking away or NOT paying your mortgage.
  3. Hardships!  These come in all sizes and shapes and include job loss, divorce, death, loss of income, medical, forced relocation, etc.  
  4. Insolvency.  Have you exhausted all available means to keep up with your mortgage?  You don’t necessarily need to tap into your retirement plan in order to qualify.

While this list is not intended to be all inclusive, as you can see there are plenty of factors that will be considered before your lender will agree to accept a short sale contract (and unfortunately contrary to popular belief we as Sellers’ can’t just decide that our transaction will be a short sale).  Communicating with the lenders is the key to making the process as painless as possible.  The type of loan you have (FHA, VA, Conventional, HELOC, 2nd Mortgage) will be the key as several additional approval steps may be required depending on the complexity of your loan.   

Why is it necessary to understand all of these steps?  The process can be time-consuming and requires plenty of attention to detail. If you’re a Seller consider selecting a Realtor that has experience with Short Sales.  I recently attended a seminar and our speaker summarized it best. If you are a Realtor and you only work with Buyers, understanding the Seller side is crucial to understanding the time frame involved in the decision making process and will help you with your Buyers.  And as a Seller you will understand why the information is necessary and key to a successful Short Sale!

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