Is a short sale right for you? The answer can absolutely be yes! Depending on the circumstances, it may be the best option to avoid the ramifications of a foreclosure. Most homeowners do not know what a short sale is and in my area, they are becoming more common. I recently listed a home where the sellers can barely sell without needing to bring money to the table. This means that they owe more than the home is currently worth in today's market.
How does this happen? There are many reasons that this could be the case.
A few years ago, 100% financing was very common. In the case of this homeowner, they had a sizable down payment when they purchase the home 5 years ago, however they decided to obtain an equity line of credit to update the home. At least hey used the money to out back into the house! This home is worth more than what they paid and what they currently owe.
The opposite could be true. Maybe the seller has had medical issues and the home is in disrepair. Maybe there was a death, divorce, disability, or loss of income that has made a foreclosure inevitable.
Many lenders are finally on board with the short sale process instead of paying thousands more to go through the foreclosure process. In order to qualify for a short sale you need to have missed at least three payments, you need to be able to show a hardship, such as a divorce or job loss, and you will need to provide bank statements to show that you cannot pay for the mortgage payments that are due. A short sale means that the lender has the ability to accept less than what is owed for the mortgage. It becomes more complicated if there is more than one mortgage or if the mortgages are owned by two different lenders.
The best advice is that when you get to a point where you know that are no longer able to make your mortgage payments, you should call your lender and find out your options. Depending on your situation, the next step may be to contact a real estate professional to obtain a market analysis to determine whether you can afford to sell without a short sale.
There are many options out there if you are in trouble and the earlier you ask for help, the faster that you can have a plan to move forward. Contact me if I can be of any assistance to you!
Keep smiling!
Karen
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