A short sale is when a homeowner sells the home for less than what is owed on the loan. The lender accepts the amount as payment in full. The sellers escape foreclosure, but receive no funds at closing and the lender does not report the foreclosure to the credit bureau. To request a short sale the owners typically present the lender with evidence of financial hardship and a current market estimate of the home’s value.

A potential sale is contingent upon lender approval.

There are six reasons homeowners default on their loans.

1. The seller secured a subprime loan.

2. Adjustable-rate mortgage (ARMs)

3. Zero down means zero equity at closing

4. Loss of income

5. Unexpected medical or home repair bills

6. Market shifts and the price declines

Short Sales are not for everyone. Just because you’re behind in your mortgage payments does not mean you are eligible for a short sale. A seller must be facing true financial hardship prior to losing their home through foreclosure to qualify. Make no mistake; your credit will take a hit, but not the same hit if your home was foreclosed upon. There are 4 criteria a seller must demonstrate to qualify for a short sale

1. Hardship

2. Financially insolvent

3. Marketing price

4. Being a cooperative seller

Foreclosure is the legal process in which a lender takes the title or forces the sale of the property as a result of the borrower’s failure to comply with the terms and conditions of the mortgage. Lenders are in the business of loaning money. They don’t want to foreclose on a property because it costs them time and money. Some of the potential expenses a lender could incur during a foreclosure sale are; legal fees, possible eviction expenses, taxes and insurance, maintenance, neighborhood dues, and selling costs. The lender will, in most cases, work with the mortgagee to get the home sold because they want to avoid these obstacles and expenses.

To find out more information about qualifying for this program, give us a call.