Best practices and strategies when selling your home.
The Short Sale
When a home is sold for less than the amount owed on the mortgage, and the lender agrees to settle the debt and release the lien for less than the full amount, the transaction is called a Short Sale.
Qualifying for a Short Sale
Your lender must be convinced that you can no longer make payments on your home. For this to happen, you must prove that you are insolvent or are experiencing a hardship. The lender must also be willing to accept the proceeds from the short sale as full payment of your debt.
A hardship exists when there are severe circumstances affecting the borrower and their finances, resulting in an inability to either make payments in the short term or pay off the mortgage debt in the long term.
Some examples of hardship:
- Reduced Income or unemployment
- Failure of the borrower’s business
- Relocation due to employment
- Unmanageable medical bills
- Death of a spouse
- Separation or divorce
- Inability to work due to illness
Why your lender may accept a short sale
A lender has a choice between accepting a smaller loss in a short sale, or a larger loss on a foreclosure. this means that in some cases, permitting a short sale is in the lender’s best interest, as well as yours.
A short sale may be an option in a mortgage default
Depending on the terms of the agreement, a mortgage can considered to be in default when one or more monthly payments have been missed.
If you are in default, you may qualify for one of these options:
- Payoff through short sale
- Loan modification
- Forbearance agreement
- Deed in lieu
A loan modification can give you a fresh start, bringing your mortgage up to date after the lender capitalizes any deliquent interest, escrow, fees and other costs. But borrower beware: Up to 70% of homeowners go into foreclosure even after their loan has been modified.
Mortgage forbearance agreement
In this agreement, the lender agrees not to exercise its right to foreclose on a delinquent mortgage, and the borrower agrees to a plan that will, over a set period, bring the borrower current on their payments. This is a short-term solution for borrowers who have temporary financial problems.
A deed in lieu
Deed in lieu is an agreement in which the borrower transfers all interest in the home to the the lender to satisfy the loan and avoid foreclosure. The main advantage is that the borrower is released from most or all of the loan’s debt. The borrower also avoids foreclosure, and may receive better terms than in a foreclosure.
Having a second mortgage
A second mortgage does not automatically disqualify you from a short sale. But both of the lenders will need to agree to the conditions for the short sale to proceed. For example, if your first lender will be paid off by the sale, then you would negotiate terms with your second lender.
Benefits of a short sale:
- No longer owe more than your house is worth
- Minimize damage to your credit
- Dispose of your debt
- Get relief from loss of income
- Sell your house while preserving equity
- Avoid foreclosure and get a fresh start
Why work with me on handling your short sale?
Being in real estate for 16 years, I have accumulated experience from handling short sales during the last recession cycle. I also work with expert loss mitigation specialists who are highly trained and extremely knowledgeable in every facet of this complicated process. Working as a team, my consultants and I have a thorough understanding of all the rules and regulations applicable to each individual foreclosure, and all the essential details that might be missed by others. Our expertise, experience and commitment to our clients are what set us apart. With our exemplary expertise, professionalism, and customer focus, we can offer you the very highest level of service.
Contact me now for a free consultation.
Most short sale services are free of charge. If you qualify for a short sale, the lender will pay all of my fees- you pay nothing.
Call me now to find out if you qualify. A short sale could give you the relief you need.