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Many people are unsure what a short sale really is - it does not mean it only takes a short time to sell your home. According to Wikipedia, a short sale is a sale of property in which the proceeds will fall short of the balance of the debts secured by leans against it. When the owner cannot afford to pay the full amount, the lean holders agree to release the lean on the real estate and accept less than the amount owed them. The amount that goes unpaid to the creditor is know as a deficiency.
That sure is a mouthful, but it's not hard to understand when put another way. Essentially, a short sale is when a bank agrees to sell a property for less than what is owed on the property. It is a legal process used by lenders to enforce payment of a mortgage debt. This is often used by homeowners as a means to avoid foreclosure. While both shorts sales and foreclosures will damage your credit score, shorts sales can have a less negative impact if reported to the bureau properly.
The homeowner can ask for a clause in the short sale contract that stipulates that the lender will not report the short sale as a charged off account to the credit bureaus. The homeowner must list their home and find a buyer to do the short sale and some lenders will even require that a real estate agent be used in the sale. The short sale application involves the seller providing the lender with solid documentation, such as the borrower's pay stubs and proof of hardship. If the seller has a high paying job or assets, they may have a harder time doing a short sale with the lender.
How do you know if you meet the qualifications for short sale help? If the following apply to your situation, you may be eligible:
- Financial hardship: Relocation, divorce, loss of income, major repairs needed without resources to make them, increased bills and living expenses, etc.
- Behind on mortgage payments.
- Facing default or foreclosure.
- Mortgage balance is greater than the value of your home.
- Depleted savings.
If you are experiencing any of the above difficulties, we can help. We have a knowledgeable short sale specialist on staff that is experienced at negotiating with lenders. If you have more questions about the process or need help getting the most of your short sale, don't hesitate to give us a call. We would like to make the experience as stress-free and smooth as possible!
