Should I sell my property short?
With the declining values of residential homes, with adjustable rate mortgages resetting at a higher interest rates, many people can't afford their homes. As most people know, if you do not make that monthly mortgage payment, the bank and/or mortgage lender will eventually attempt to foreclosure your interest in that house. Also, as many of you can imagine, the process of foreclosure is extremely draining on your pocketbook and your head. What has happened through this financial mess, the short sale is becoming an increasingly popular tool for someone to rid themselves of their property. From a practical point of view, many people make the educated assumption that they cannot recover from the loss in the real estate market and make the decision to sell. So, if your decision to sell is the best for you, I am going to make some recommendations about what to do.
First, let's look at what a short sale is: if your mortgage amount (balance) is more than your house is worth, a short sale means that the bank and/or mortgage lender is willing to take less than what's owed on the home. Due to the current real estate market, many people are now up-side down on their homes. My first recommendation on what to do is call your bank and/mortgage lender and let them know what is going on. Talk with them, explain your situation and ask for some advice as to the way to proceed with this situation. In working with short sale clients, one universal thing is clear. Generally speaking, people don't want to see their own reality and not doing anything is a temporary cure for some folks. During your discussions with them, ask them if they accept short sales, will they modify a loan, etc.. I think that you would be surprised to know that most lenders want to work with you. Remember: Banks are not in the business of owning property, they are in the business of lending money. With that premise being true, you will realize that they are willing to work with you.
Make sure that you document your discussions with the bank and/or mortgage lender. For instance, I would recommend that you find out the name, extension number of the person that you spoke with. After the discussion, I would write a brief letter explaining what we talk about and make sure that you reference your loan number, then send it to them. That way, with the proper documentation, you can show the lender that you are committed to bring about an amicable resolution to this problem.
When preparing for a short sale, the lender will require that you submitted a whole bunch of information including but not limited to bank statements, hardship letter, weekly pay stubs, tax returns, purchase agreement with buyer, preapproval letter from prospective buyer. With some variation, most lenders require the same thing. The end result is that you need to demonstrate to the bank that you no longer have the ability to pay. Then, the waiting game begins. Unfortunately, and considering the amount of files that lost mitigation may be handling, this can be a long process. Make sure when you send these items, call them to confirm that they are in receipt of your documents.
Understandably, the prospect of losing your home can be extremely difficult but you need to make sure that you deal with it no matter how difficult it is. There is help out there but you need to ask for it.
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