Owing more than your home is worth in today’s Crofton real estate market is just one of the factors determining whether a lender will approve your short sale. That alone is not enough to qualify for a short sale.
According to America's Home Rescue, you must first be able to satisfy your lender(s) regarding these three factors before most lenders will consider your short sale application:
1. You are behind in your mortgage payments.
2. You have a genuine hardship.
3. You have no equity in the property.
In fact, some lenders have a much longer list and they all require a lot of supporting documentation. On the flip side, some lenders are flexible about these three factors.
Please don’t stop making payments on your home just to qualify for a short sale. The fact is that you’re probably already behind if you do have a qualifying hardship.
You will have to jump through a whole bunch of hoops with your lender, even if you do meet this basic test – and the process will be different, depending on what kind of loan you have. If you owe more than you can get for selling your home, ask your prospective real estate agent if they know the process for short-selling a home with YOUR loan type and/or YOUR combination of first and second trust. (If they know, they’ll be able to explain the difference between your loan type and another.)
Finding a buyer for your Crofton home may not solve your problem. If your agent doesn’t really know the short-sale process, he/she may give you well-intentioned but wrong advice on what is or is not an acceptable short sale offer from your lender's perspective. After weeks or months of uncertainty, your buyer could withdraw or your short-sale application could be turned down and you could lose your home to foreclosure.
If there was ever a time in your life to choose the most experienced real estate agent instead of the cheapest, this is it.
Selling short may not be an option for you, so you need to know “up front” what your chances are of qualifying for a short-sale, what the process is (and follow it!), and what other alternatives there are for dealing with the “under-water” or “upside down” loan on your Crofton home.