Short Sale Your Home
A short sale is an option to help homeowners who are behind on their payments, and no longer able to maintain the home, due to a hardship avoid foreclosure. In the short sale process, the homeowner sells the home and settles the debt with the mortgage holder for less than the total amount owed.
You, the homeowner, will actually put the house up for sale. A buyer makes a purchase offer that you, and the mortgage company, already know will be less than the outstanding balance of the loan.
The mortgage company is the one calling the shots. They will review the offer and make a decision whether to accept the offer amount. If accepted the house is sold, and the remaining balance of the loan is usually forgiven.
Short Sales are usually only a consideration when the homeowner is in some sort of financial distress like a loss of job, serious illness, etc. And the mortgage payments are delinquent. You owe more than the home is worth. And an eventual foreclosure seems likely.
It will benefit you because you avoid foreclosure and you get a satisfaction of the debt. A mortgage company will opt to allow a short sale if they feel that it will be a smaller financial loss rather than letting the loan fall further behind and eventually ending in up in a court foreclosure. Short sales have been around for decades. They are becoming more common now because of the current U.S. economy and the national downturn in the real estate market.
Adding to this scenario is that more and more homeowners are out of work. Plus, they are behind on their mortgages, plus home values have decreased to the point where the homeowners owe more than the house is worth.
It is these types of distressed circumstances that must be proven by the homeowner. This is requirement in order for the mortgage company to consider a short sale.
The key factor to keep in mind is that short sales are solely a financial decision to the mortgage company. If their calculations that show a short sale will be financially better for then it is likely to be approved. On the other hand, if there are a lot of problems like other mortgages or liens on the property, co-owners disagreeing on what to do, current bankruptcy proceeding, etc. then that mortgage company may decide a foreclosure would actually be fewer problems.
If the homeowner is able to get a short sale then instead of a full foreclosure showing on the credit history. The mortgage will be reflected as having been paid off and closed, but with a settlement accepted for less than the total amount.
We all know that a debt settlement is not as good as a debt paid in full. But it is definitely a lot better than having a foreclosure. And significantly better than completely destroying your credit by just walking away from the home without an attempt to resolve the issue, as some people have chose to do.
To summarize, the key points to remember about Short Sales is that they are only for those looking to get out of the home while limiting the damage to their credit. Short Sales are not for people looking for ways to save their home. Short Sales do not get automatically approved by your lender. Contact must be initiated by the homeowner. And the homeowner must prove that they are in a hardship, the situation is not likely to improve soon, and foreclosure is inevitable. Also remember that if the mortgage company agrees to a short sale, they will be ones in control of the transaction. Because short sales are not automatic, it is very important for homeowners to educate themselves BEFORE they attempt to contact the Mortgage Company. This consistently has proven to significantly increase the likelihood of the short sale option being accepted.
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