You've stressed and gone down every avenue you can to try to keep your house, but you're over your head! What can you do? Let the house go into foreclosure? Rather than ruining your credit, a short sale may be a viable option.
A short sale can be a dignified solution to a financial crisis. Many homeowners today owe more than they are worth! What is a short sale? In a nutshell, you owe more than the house is worth, and you find a buyer who's willing to purchase your home at today's market value, you ask the bank to take less than is owed to release the house so the buyer can purchase the house.
There are several qualifications for a short sale, such as:
- Financial Hardship - There is a situation causing you to have trouble affording your mortgage.
- Monthly Income Shortfall - "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency - The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
You do not necessarily have to be behind on your mortgage payments for lenders to consider a short sale. While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.
If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.
Foreclosure is a process, there is time to make decisions that may result in better outcomes.
The foreclosing party, in many cases a lender, can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.
It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, one out of five homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.
With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.
Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.
If you decide that a short sale is a good option for you, please make sure your real estate agent knows what they are doing! It is imperative to hire a realtor who can help you sell your home. I recommend hiring a Certified Distressed Property Expert. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.
This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.
Find a CDPE
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