What is a Utah short sale?
A real estate short sale is a process where the lender allows a homeowner to sell a property for less than the mortgage balance. In a short sale the lender agrees to accept proceeds from the sale that fall "short" of the amount owed on the property’s loan. Lenders only agree to short sales if they receive a full and complete package meeting the specific guidelines of that particular lender.
Why do lenders agree to short sales?
Why would a lender agree to take less than what is owed to them? The foreclosure process is long and costly to the lender so, in most cases, the lender is willing to consider taking a loss through a short sale versus a significant loss through foreclosure. Many lenders look at a short sale as a better alternative to foreclosure.
How can I qualify for a Utah short sale?
Most short sales occur when a homeowner can no longer continue making the monthly mortgage payment. Although each lender has their own rules they follow when considering a short sale, here are some general guidelines:
• The borrower must have a financial hardship (loss of income, reduction of income, death in family, divorce, job transfer, excessive debt).
• The borrower must be behind on mortgage payments.
• The home must be listed for sale with a licensed real estate agent.
• The borrower must provide a full financial disclosure (pay stubs, bank statements, tax returns, financial statement, and hardship letter).
What are the benefits of a Utah short sale over a Utah foreclosure?
• Minimize credit damage
• Reduce the deficiency balance
• Lower your tax liability.
• Gives the borrower an opportunity to negotiate best possible terms with the lender.
What is the difference between short selling and foreclosing?
• A foreclosure negatively affects your credit score. Not only will this drastically drop the score, but will prevent you from obtaining any type of financing for 7-10 years. Even after this period, the mortgage loan application will always state that the borrower had a foreclosure, and can seriously affect that your ability to obtain financing and credit in the future.
• A short sale will affect the your credit, but not nearly as much as a foreclosure. The credit will be negatively affected for approximately 24 months.
• With a foreclosure, a public notice is filed and privacy is not maintained. The short sale process ensures that the seller will maintain their privacy.
• With a foreclosure, a lender can assign a judgment against the homeowner and garnish remaining assets such as bank accounts, income, etc. With a short sale, you walk away free and clear without any deficiency judgment actions taken.
Need help in Southern Utah with your buying or selling a short sale? Contact the Cedar City real estate experts at Carte Blanche Realty.