If you live in Elkhart County, Indiana you have probably heard of a Short Sale, starting today I am going to tell you everything you need to know-this is Part 1.
The news media, whether it be television or newspaper has been talking about Foreclosure, Pre-Foreclosure and Short Sales for several months, probably over a year by now, due to the higher than average unemployment rate. You may even be facing foreclosure yourself, know someone who has or see signs of it in your neighborhood.
I am going to give you the information you need to know, whether you are looking for a great deal as a home buyer or you are behind in your mortgage payment and need to sell. I am your source here in Elkhart County for Short Sales. There is no other Real Estate Agent in Elkhart County that actively helps people buy or sell more short sales than I do, this is my specialty!
What is a Short Sale? A Short Sale is when the homeowner owes more to their lender than the current market value of the property. Let's say you owe $150,000 on your home and in today's market a buyer makes an offer of $128,000 based on the last homes sold in the immediate area. No buyer will pay $150,000 for the home and the only way to sell is for the Lender to take less than the Home Owner currently owes.
There are a gazillion Lenders out there, and each one has their own policy about what they will and what they will not settle for. Not all Lenders will accept less for the home. We don't know the answer until we have an offer on the property and the Lender reviews it.
The hardest part of the process is the Waiting Game...Both Buyers and Sellers have to be fully prepaired to give the Lender plenty of time to review the offer...
I have had approvals in as little as 20 minutes after the Lender received the offer and the full hardship package, and I have also had to wait 5 months to get an answer. These were two different Lenders. If I had to say an average time for reviewal I would say 45 to 60 days, at least.
If you have PMI or MIP, Prive Mortgage Insurance, Mortgage Insurance Premium, on your loan, then the mortgage insurance company will also have to approve the Short Sale. Mortgage Insurance is insurance that the Lender will get some money if the Home Owner default during the repayment time of the top 20% of the loan.
If you have a First Mortgage and a Second Mortgage with the same or a different Lender, both will have to agree on the amount to be paid to the Second Mortgage Lender and this sometimes complicates the negotiotions and adds time to the clock.
Why would a Lender agree to a Short Sale in Elkhart County, Indiana in the First Place? I have heard that it costs a Mortgage Lender more than $55,000 to process a Foreclosure, from start to finish. A Short Sale usually gets them more of a net amount and takes less time. In Indiana the complete Foreclosure process takes anywhere from 9 to 11 months from the time you miss your first payment. And Yes, you can stay in the home even if you are not making mortgage payments.
Not everyone who owes more for their home than the current market will pay is qualified to do a Short Sale. The required documents the Lender needs to see is called a Hardship Package and the Home Owner must pass the "test".
Not all reasons that got you behind are qualified as a hardship to the Lender.
If you foolishly got a loan to pull all the equity out of your home and now you want to sell
If you stated your income to qualify for the home and it was not your real income
If you want to walk away just because you can
If you have substantial money in the bank
well, you get the idea, you will have a problem convincing the bank that you truely do have a hardship!
In my next part of this series I will tell you:
- What the Hardship Documents Are
- How and When to Get Them Together
- Some Real and Unreal Common Beliefs
If you have questions about whether or not you qualify for a Short Sale, please call your local Elkhart County Real Estate Expert and Certified Short Sale Specialist Evelyn Johnston with Prudential One Realty at 574-304-7148.