From time to time in our lives, we face difficult situations where it is wise to cut our losses, but if the loss is your home, it’s likely that the decision to do this is naturally quite difficult.
If you are in the regrettable position of needing to sell your home because of your financial circumstances, a veteran Realtor with Nance & Associates, Realtors can certainly be a great asset.
In the event your residence is really worth less than what you are obligated to repay on your loan, our seasoned Realtors are acquainted with Short Sale procedures and will be able to guide you throughout the often challenging process of negotiating a short sale.
The term ‘Short Sale’ merely refers to the fact that the present market value of your house is short of the actual dollar amount that you are obligated to repay on the loan.
The fact is that, because of past financial practices that have largely been rectified by now, many thousands of homeowners have found themselves in this unsustainable situation.
The mix of mortgage rate increases, home value decreases, food item and gas price spikes, can make it nearly impossible to survive on the earlier planned budget.
If the only answer is to put up for sale your home, you should keep in mind that a short sale is distinct from selling your home under typical market conditions.
Usually, the lender would probably not know that your own house is on the market until your Lawyer or Title Company asks for a payoff to repay the loan.
Regardless, with a short sale, the lender will have to be in on it from the very beginning. Also, there is more documentation for you to handle with a short sale.
In particular, you need to give permission, in writing, for your mortgage company to communicate with one’s own Realtor. A far more difficult task is to try to document all of the factors why you can’t repay the full loan amount which you are obligated to pay.
This is what’s called ‘proving hardship’ and attached with your letter of explanation is normally bank statements, credit card bills, W-2s and any other proof of your incapacity to pay back the mortgage.
This hardship statement will not absolve a property owner from the obligation of one’s debt, though it may.
The Lawyer or Title Company which will be taking care of the documentation on your behalf will likely ask your mortgage company for a ‘Satisfaction’ of the loan. Although a ‘Release’ may be the best that they can obtain.
Typically, mortgage companies don’t want to acquire a supply of Foreclosed homes that they will have to manage and preserve; they’re in the business to make a make profit. In the event that the short sale process is approved by your mortgage company, it will likely save them the time and expense of having to foreclose on the home.
Foreclosures can be very costly and time intensive for your loan provider; a lot of foreclosures on the books could also jeopardize the mortgage company’s future home loans from being insured.
Basically, a lender will prefer a short sale over a foreclosure if you are co-operating by offering one.
A short sale can still impact your credit rating, but if you emerge from it with the financial debt cleared (or ‘forgiven’), it’s possible to have a fresh start. If your lender ‘forgives’ your financial debt, then a 1099 will be issued so that the amount of the excused financial obligation is documented for you, the seller, to declare to the IRS at tax time.
All liens on the dwelling must be released prior to it being sold; this includes the lender’s lien. If you can try to keep your financial institution’s good will, or at a minimum co-operation, the transaction will likely run significantly more smoothly.
Knowledge and patience are invaluable assets during the short sale process!