First let’s look at “What is a Short Sale?” You may have heard this before but lets not assume that everybody looking in here knows the answer. We’ll get into more detail shortly.
A Short Sale is when you receive approval from your Lender (Bank) that they will agree to allow a Buyer to purchase your home for less than what is owed on your home(mortgage balance).
For example, You owe $300,000 on your home and you have a buyer who has offered to pay $225,000. Your Lender will agree to accept the $225,000.
This approval is based on a number of factors that will be addressed in another Chapter.
You’ve received approval now from your Lender and the next thing for you to do is to pack up all your belongings and get ready to move upon the closing as a new Chapter of recovery will begin to take shape in your life
Now the question comes up; “How does somebody qualify to sell their home as a Short Sale?”
It will need to be determined that a Hardship occurs in your life. So what qualifies as a Hardship? Lets discuss some possible hardships:
You’ve lost your job and your household income has been drastically reduced.
Your family has had medical expenses that have eaten into your ability to pay.
You’ve gotten a divorce
Your adjustabe rate mortgage has adjusted and there’s no way you can make the new payment on your income.
Your employer has cut back on your salary or perhaps on your hours of work.
A loved one has died
Your job required you to move out of town and you’re now paying two house payments and you can’t sell your home that you’ve been trying to sell.
Basically, you are now living a financial nightmare where your expenses are more than your income; you’re insolvent
Other economic hardships may occur and may qualify you for a short sale when you’re not insolvent. At this point, your Lender may accept a Promissory Note for your short deficiency(to be discussed in a later chapter)
You will need to be able to document your hardship as your lender will want proof.
You will need to prepare a Letter of Hardship detailing your circumstances and what got you into your situation. This is a letter that you need to write and you don’t want to leave anything out. Your Lender must be able to feel your distress.
The more you know, the better prepared, the better the outcome. Stay tuned for the next Chapter addressing Short Sales. Come back soon to see the next released Chapter. Got something that you’d like addressed, let me know.