You must have heard of the term “short sale” a lot in the past couple of years. A short sale is something we hear more often when a homeowner is going through a mortgage hardship and is looking for a quick way out to satisfy their mortgage. So, let us be a bit clearer on what exactly a short sale is. A short sale is when a homeowner sells his/her property, with the awareness and approval of the mortgage lender for less than what is owed to the lender. If the lender accepts the terms, then you can proceed with selling the property.
For example, consider you’ve defaulted on your current mortgage payments and your lender decides to file for foreclosure against your property. The first thing that you should do is not panic, remember ‘keep calm and know your options’. You can call up your lender and let them know you are planning on doing a short sale on your property. So, you owe $800,000 to your lender but, you found an interested buyer who is only willing to pay $600,000 for your property. So now what do you do if you aren’t in the position to pay off the remaining $200,000? This is when the short sale comes in very handy, if you can convince your lender to agree for a lesser amount than what you owed. Most lenders and banks would agree to the terms of a short sale. The final result is a win for all parties because the lender gets the to chance to take a bad loan off their books, you, the owner gets a satisfaction of mortgage letter, and the buyer gets to buy the property at a bargain price.
Knowing the Difference Between
Foreclosure and Short Sale
A foreclosure and short sale are two entirely different things and here is why. In a foreclosure the homeowner continues to default on the mortgage the lender would then foreclosure on the house. “Foreclosure” is just a legal term that is used which means taking possession of a mortgaged property. Unlike a foreclosure, a short sale doesn’t impact your credit much and if it does it will not impact it for long and your credit will begin to repair itself over time. You’ll even have the chance to apply for a home loan for two years while in a short sale. On the other hand, a foreclosure will damage your credit and won’t be able to take out a mortgage to purchase another property for the following 7-10 years.
How to Know You're Eligible for A Short Sale
Saving your property to avoid a foreclosure with a short sale seems pretty amazing, but you must check for your eligibility. You must meet all the criteria and might require a written proof stating your eligibility from the bank or the mortgage lender. This process is really time-consuming but have patience. One of the criteria for being eligible for a short sale is that you must be underwater. An ‘underwater’ mortgage is when the balance of the mortgage loan is higher than the fair market value of the property. You will also need written proof that states you can no longer afford the monthly payments and any proof of financial hardship. These are some of the things you will need to be eligible for proceeding with a short sale. Before applying for the short sale, be sure to pass all the eligibility criteria
The main key to every successful short sale is to stay patience, have confidence and make sure you have the right real estate professional by your side who knows their way around all the obstacles.
If you are looking to speak to a professional, there are many skilled real estate agencies like 'sims management' that are available to help ease the pressure and the nightmare of foreclosure by giving you experienced advice on foreclosure to help the process move smoother and finding a buyer for the property.
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