Most homeowners today are turning to short sale in order to avoid foreclosure. This gives them the chance to pay off their loan and move on. However, how does one apply for such? What are the things they need to prepare and what happens if the lender rejects the short sale proposal?
A short sale takes place when the property’s value is lower than the remaining mortgage balance. The homeowner at this point can present a short sale package to the lender and see if he gets an approval. The approval of the lender is necessary because he will surely lose at the arrangement. Approving the package would mean that he will accept a discounted payment for the amount owed.
If you want to get an approval, you need to have a very good package. You should first have a hardship letter. This should indicate the reason why you are no longer able to make the monthly payments. It could be because of growing medical expenses. You may also have encountered death in the family. You can also indicate that you lost your job. Make sure that you attach the supporting documents.
In addition to that, you should also present an offer from the buyer. Make sure that all the requirements needed for the package is complete. Call your lender ahead of time to ask about the other requirements. You need to be familiar with all your documents so that you can convince the mitigating officer during your meeting. For most lenders, short sale is the last option. If they could earn more if they foreclose your property, then they will.
Most lenders will reject short sale package because of the offer made by the buyer. If the lender thinks that your property is worth more than what you claim, he will send a broker to check the property. If he is right about the value, your package will surely be rejected. To prevent this, make sure that the value presented is reasonable. Make sure that you are there when the broker checks your property. You can walk him through the house and present the documents concerning the repairs made on your property.
What happens if the lender rejects your proposal? Well, try again. However, this time, make sure that you have better offer. Ask your buyer to make a higher offer. If your buyer refuses, look for another buyer who can offer a better value.
For buyers, bear in mind that foreclosure is a tedious process and may take months before the closing takes place. This is why you have to be very patient. You can help by making a good offer. See to it that the value you are offering is suitable for the property.
Short sale is a good option if you are in threat of foreclosure. However, you have to make a good short sale package to convince the lenders. If your package gets rejected, try it again. This time around, talk to your buyer to increase the offer. If not, look for a buyer who can make a better offer.
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