Short Sales
The Long and Short of Short Sales
It is a grim reality that many homeowners’ mortgage balances currently exceed the value of their homes. This is a difficult situation, leaving a distressed homeowner confused and uncertain over his or her future. If you are in this position, there are several steps to take, including looking into a possible mortgage modification, or even refinancing the loan. If you have exhausted these options, or simply can no longer afford your home due to the loss of a job, or another unforeseen hardship, a short sale may be the solution for you. It is considered a dignified solution in a financial crisis.
Short Sale Qualifications
Lenders use three qualifications to determine a homeowner’s short sale eligibility:
Financial Hardship—you will need to demonstrate a verifiable material hardship that is affecting your ability to pay your mortgage. This often includes an increase in payment, a job loss, a decrease in income, or excessive medical expenses.
Monthly Shortfall—your lender will want to see that your hardship is causing a financial shortfall every month, meaning that your total monthly expenses exceed your monthly income.
Insolvency— prior to approving a short sale, your lender or servicer will want to see that you are insolvent, or that you do not have the liquid funds available to pay down your mortgage balance.
Short Sale Process—
To successfully sell your property through a short sale, you will need to enlist the help of a trained real estate professional. Your assistance throughout the process will improve the likelihood of a successful outcome – a sale, and most importantly, an avoided foreclosure.
Here is a simple list of items to accomplish immediately:
Prepare your property for sale, including the following items: remove all clutter, ensure that all lights are functioning properly, and clean the property to make it as presentable as possible. Your agent will have additional suggestions for you, but there is no reason to delay getting started.
If you believe a short sale is the right option for you, consider listing your property with a qualified CDPE professional who will serve as your ally throughout the entire process. Prior to the first meeting with your agent, you will need to gather the required paperwork and documentation that is listed below.
Paperwork Needed for a Short Sale (Start Now)
Your agent will need the following documentation to demonstrate to your lender that you qualify for a short sale:
Two months of recent mortgage statements (all mortgages)
Two months of checking account statements (all borrowers if separate)
Two months of saving account statements (all borrowers if separate)
Two months of other account statements (all borrowers if separate)
Last two paycheck stubs (all borrowers)
Two years tax returns
Hardship Letter (see samples)
Financial Worksheet (provided)
Any other documentation that will help your agent prove your hardship
How will my retirement be treated in a short sale?
It is a common misconception that if you have any assets or savings, you won’t qualify for a short sale. This is not normally true, and some banks are even disregarding retirement accounts that would otherwise be protected in a bankruptcy. Don’t assume that you will have to withdraw funds from an account in order to qualify for a short sale.
Don’t Delay
Each day is important when you are exploring options for your mortgage, so don’t wait to find a solution to your issue.
For more information on short sales, please contact TeamCox Realtors at 303-400-6060.
