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Does Your Home Qualify For a Short Sale?
By
Steve Ramirez
Contrary to
popular belief, not every homeowner can
qualify for a short sale. While a short sale
can help if you are unable to make regular
monthly payments on your mortgage, you must
present your lender with a valid reason why
you can no longer make these payments.
Lenders have their own guidelines when it
comes to short sales and may have other
options if you are experiencing financial
difficulty.
What is a Short Sale?
A short sale occurs when lenders allow
homeowners to sell their homes and settle
for a sum that is less than the current
mortgage owed. Lenders will often take a
minor loss on their investment instead of
having to go through the foreclosure
process. When the home is sold, homeowners
will pay the lender an agreed upon fee,
which is usually the current market value
regardless of the total amount of the
mortgage owed.
Qualifying for a Short
Sale
Most lenders will agree to a short sale when
or more of the following occurs:
Mortgage default
- If you cannot make regular monthly
payments due to a job loss, death of a
spouse, or medical expenses, you can ask
your lender if a short sale is possible.
Market Value Decreases
- If you can prove that the current value of
your home is not equivalent to what you owe
on the home, your lender may agree to a
short sale.
Bankruptcy - If
you file for bankruptcy and have no assets
including savings, stocks, and other
investments, your lender may allow you to
sell the home in a short sale in order to
avoid foreclosure.
Keep in mind that you must submit a hardship
letter to the lender for review. You will
not qualify for a short sale for reasons
such as:
Family expansion
Failure to maintain your personal finances
Buying another home
Neighborhood depreciation
Failure to sell your home for the price you
hoped for
Once your lender has approved your reasons
for asking for a short sale you can sell
your home on the market and consider a short
sale.
Hiring a real estate agent who handles these
types of sales is a good idea as they will
have a better understanding of the market
and finding the right buyer. You should also
hire an experienced real estate attorney who
can help you avoid potential pitfalls.
Short Sale
Repercussions
Even though you're able to avoid
foreclosure, participating in a short sale
is not without consequences.
Your credit report may include the short
sale as a preforeclosure. This can hinder
your attempts to buy another home, qualify
for a car loan, or obtain credit cards and
other credit services in the near future.
Before proceeding with a short sale, contact
an experienced real estate agent and a
experienced attorney who can go over your
financials and determine if you are the best
candidate for a short sale. Depending on
debts you owe, there are other options that
include reworking your mortgage or catching
up with missed mortgage payments over time.
Conclusion
Are you one
of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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At these seminars an attorney will personally go over your
mortgage looking for a defense