Topic: Short Sale
In my experience a short sale is actually a pretty easy process (depending on the lender). If you are in a situation where you owe more than the home is worth and need to sell because of one reason or another a short sale is a much better option than a foreclosure for two reasons:
•1. Before a foreclosure can happen you need to stop making payments. This reports back to the credit bureaus and destroys your credit. Not to mention when all is said and done you'll have a foreclosure on your credit.
•2. The opposite is true for a short sale. Sometimes you can negotiate a short sale with out ever having missed a payment. This will allow you to settle the amount you are short with the lender and salvage your credit at the same time. A short sale shows up on your credit as "account settled for less". This, by itself, does zero damage to your credit score.
How to go about it...
The first thing you need to do is contact your lender and request that they mail you their short sale requirements. Once you confirm that the lender will work with you, consult a realtor and list your property at an amount that he or she deems your home to be worth.
After you get a purchase agreement from a potential buyer it's simply a matter of putting together all of the necessary paperwork. The lender is going to need to see the following:
- Purchase agreement
- Past listings (if any)
- W2's for the past 2 years (for everyone on the mortgage)
- Recent pay stubs
- Two months worth of bank statements
- Completed financial statement (mailed by the lender in the short sale package)
The down side to a short sale is the same as a foreclosure in the sense that you typically will not be able to get approved for a mortgage for the next two years.
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