Foreclosures are the last thing homeowners want to hear. But if time comes it is already right at your doorstep, a short sale might just save you.
Once homeowners become behind on their mortgage payments, lenders start foreclosure proceedings. However, you can avoid it through a short sale offer. Once a lender agrees to this, it means it is okay for them to receive less than how much you owe them. It also means you have realized that the value of your property is not worth what you thought it is.
A real estate agent helps in finding a buyer who is willing to buy the property at an amount less than what is owed. Once the seller accepts the offer, he asks the lender to accept the offer of the purchaser. Once the lender agrees, the buyer pays and foreclosure stops.
However, not all short sale offers by owners are granted by lenders. Sometimes, lenders deny such offers when they feel there is more financial sense if they will foreclose a property.
To be qualified in a short sale, there are four requirements. These are the following:
With comparable sales, know that your property’s value is less than the mortgage balance.
The mortgage must have defaulted. This means you are already behind in your mortgage payments.
You have fallen on hard times. Write a letter of hardship explaining why you can no longer afford making payments. Examples include unemployment, illness, divorce, bankruptcy, death, etc.
You do not have any other assets. If ever there is still something you can sell or use to pay the amount due, the lender might deny short sale.
Short sales are recognized as pre-foreclosures that is why they still have an effect on credit rating. But at least, it has better rating than that of foreclosure and bankruptcy.
Whenever you are facing foreclosure and deciding on a short sale, always seek for legal consultation.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
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