WHY DO A SHORT SALE?

Why a Short Sale is good for you?
When you can no longer afford to keep current on your mortgage payments, a Short Sale can be your solution. A Short Sale can relieve you of your mortgage debt and may restore your credit in as little as 18 months. It will not help save your home; rather, it is a last resort to avoiding foreclosure.

In the current economic climate, Short Sales are very prevalent, especially since homeowners with adjustable-rate loans are unable to make payments as their interest rates increase. Other homeowners fall behind on payments because of job loss, divorce, illness or other unexpected expenses. If you can relate to this situation, Short Sale may be a good option for you.

What are the advantages of a Short Sale?
A Short Sale is more advantageous than a foreclosure, which can drop your credit score up to 300 points and damage your credit report up to 7 years. A Short Sale shows up on your credit report as a “pre-foreclosure in redemption” and drops your credit score about 100 points. With a Short Sale, homeowners can purchase another home in about 3 years.

A Short Sale acts as a way to sell your house for less than what the original loan amount was. It is a great way to save your credit report from being damaged for years and years. When you foreclose your home, you lose all equity and have to build your credit report from scratch. Keep in mind that bad credit can make it impossible for you to rent, buy a car, apply for credit, apply for jobs or get reasonable interest rates. Basically, a Short Sale gives you a chance to get the actual amount of the property and repay your mortgages so that your credit rating is not badly affected.

When should you consider a Short Sale?
You should consider a Short Sale when your property is worth less than what you owe, or when you can no longer afford your monthly mortgage payments. It is an alternative to bankruptcy or foreclosure proceedings, which could negatively affect credit score and hinder your chances of purchasing another home.

For example, if the unpaid balance of a loan is $200,000 and the property is sold for $150,000, a lender might accept the property under a Short Sale for $150,000, which means the property will be “shorted” $50,000.

A Short sale is a good option to consider especially if you want to avoid bad credit ratings. To make sure you get a successful outcome, it is important to contact your lender, put together a hardship letter, disclose proof of income and assets, provide a copy of bank statements and provide a purchase agreement.

When and how should you begin the Short Sale process?
The sooner you begin the Short Sale process, the sooner your negotiations with lenders will begin. Starting as soon as possible can increase your chances of a successful resolution.

To start a Short Sale, most lenders have a short sale package containing documents that the seller must submit for approval. These documents include a hardship letter from seller/borrower stating why the short sale is necessary, the seller’s financial statement, recent pay stubs, most recent bank statements, most recent tax returns, copy of the Agreement of Sale between the seller and buyer, and a copy of proposed settlement statement (HUD-1). Once the package is submitted to the lender, a negotiator handles the file on behalf of the lender through closing.

APPLY FOR A SHORT SALE