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Short Sale Tips You Should Keep in Mind



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By : Roby Hicks    99 or more times read
A short sale can only exists when the value of the property is lower than the value of the remaining balance of the mortgage. In this case, the homeowner may be near default because of a hard time that he is dealing with. To avoid further problems, he applies for a short sale. However, it is not that easy because he needs to get the approval of his lender. It will be difficult for the lender to do this because he will lose significantly when he does.

This makes it essential for sellers to know what they should do in order to get the approval. What are the necessary requirements and what are the other things that have to be done? How can you help the lender reduce the possible losses when he agrees to this type of arrangement?

Qualify

The first thing you need to do is to qualify, but how? In order to qualify, the value of the property should drop. As mentioned earlier, it should be lower than the mortgage balance. This can happen if the value of the properties in your neighborhood have dropped. This may also be caused by the lack of maintenance and repairs in your property. This normally happens because you no longer have enough funds for the maintenance expense.

You should also need to prepare a hardship letter. The letter shall explain your current predicament and why you will no longer be capable of paying your monthly mortgage. Bear in mind that not all circumstances are acceptable for the lender. Among the acceptable conditions are divorce, tragedy, death in the family, medical expenses and unemployment. Do not expect to be taken seriously if you just want to get rid of your house and move to a better home.

You should also provide your financial statement. Your lender will want to check your other assets and make sure that you are indeed unable to make the monthly payments. Remember, no lender would want to go through this because of the losses he will incur. They also want to make sure that the seller is not just doing this to avoid paying the rest of the loan. Others only use this to acquire a new home.

You should also be patient if you apply for this as this can take several months. Most of the time, the homeowner will have to apply a new package as well.

Buyers

If you plan to buy a short sale, do your research first. This is important to know who has the title of the property. You can ask for the help of your real estate agent with this. To make it easier, make sure that your agent is experienced with the short sale transaction. Aside from this, you have to know how much the remaining balance of the mortgage is. This will give you an idea of how much offer to make.

A short sale is a good investment, however, it takes patience. You have to be patient and wait for the approval. You have to be determined as well as there are cases when you need to increase your offer.


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