Who is eligible for a short sale?

First, lets start with what a short sale is...

a short sale refers to the sale of real property for an amount less than the amount owed on the property.  The existing lender or lenders have to agree to accept less than the full balance due on the loan (AKA "Short Sale").

Next question...would you qualify for a short sale?                        

A good Short Sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations.  There are many reasons you might fall behind on your mortgage payments...divorce, job loss, job relocation, sudden change in your monthly income, unexpected medical expenses, or adjustment in mortgage payment or unforeseen increase in living expenses.  Also a good Short Sale candidate has no equity in their home.  They are not able to sell their home and pay off all of the outstanding loans that are secured against their home.

But I have 2 loans, will I still qualify for a short sale?

It is possible to work with both lenders to approve a short sale.  Even if the value of the home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate.  And sometimes, both loans are held by the same mortgage company - this does make the process easier.  In the end, neither lender wants the property back through yet another foreclosure.

And why would your bank agree to a short sale?

Banks really are not in the business of owning homes.  It is much more cost effective for a bank to do a short sale rather than going through the foreclosure process on a home.  Banks make their money from receiving monthly mortgage payments, not by owning real estate.  While banks will take a loss doing a short sale, they can often minimize their loss by as much as 10-20% over a foreclosure.

This is the first in a series of posts regarding Short Sales...make sure to check back or subscribe to our blog for more information on Short Sales. 

If you are behind in your mortgage payments or are having financial difficulty and think you might want to discuss the option of a short sale, please call us at (916) 405-5766 or send email to Lori@ModeandDurhaM.com.  We are here to help!

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Lori Mode & Bruce Durham, Keller Williams Realty, Elk Grove