Qualification for a Short Sale include three major issues. If you are a homeowner facing a financial situation causing you not to meet your monthly mortgage payment, find out How to Qualify for a Short Sale. There are many misconceptions of what qualifies a seller for a short sale. However, there are basically 3 major items that most lenders look for to determine if a seller qualifies for a short sale.
Financial hardship is the first Qualification for a Short Sale. A financial hardship is an issue that has caused (or will cause) you to miss your payments to your lender. The lender will want to see some type of financial hardship. If you are still making your payments to your lender, a financial hardship is an issue that is causing you to have financial difficulties. Some examples of a financial hardship as a Qualification for a Short Sale include mortgage payment adjustment, job loss, too much debt, and business failure, just to name a few. A financial hardship is defined as, "A material change in-between the day the mortgage was signed and today that has affected your ability to pay."
A monthly shortfall is the second Qualification for a Short Sale. This means that your income minus your expenses equals a negative amount. The lender will want to see that you financially cannot afford to pay your current mortgage. To provide proof to the lender, you must complete a financial worksheet. This basically shows your income and expenses on a monthly basis. If you do not currently have a monthly shortfall but may have one in the future due to mortgage payment increase, future layoff, etc. then you may still qualify for a short sale as long as this issue is verifiable.
Insolvency is the third Qualification for a Short Sale. In order to qualify for a short sale, you must show that you do not have money to pay down or pay off your mortgage obligation. Being insolvent means that you owe more than you have in cash. This is what the mortgage company wants to see. However, this doesn't mean you cannot have money in the bank or in retirement funds. Having money in the bank for living expenses is common and lenders understand that. However, your financial worksheet may show that over time you will not have this money and not be able to pay your mortgage payment.
While these Qualifications for a Short Sale sound difficult, they really aren't. Hiring a Realtor experienced in short sale negotiations as a certified negotiator (CDPE) can make the process quite easy.
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