With the national real estate shop in turmoil we are seeing homeowners turn to short sales as a clarification to avoid foreclosure. In this record we will retort the top 10 most oftentimes asked short sale questions that we receive from clients. We very encourage you to peruse all of your options to avoid foreclosure and come to be as informed as you can about each selection and speak to marvelous individuals who can help you conclude what is best for you and your family.
Now, let's retort some questions!
1. What is a Short Sale?
A short sale is when a homeowner owes more to the bank than the value of the home and the bank agrees to sell the property for less than is owed. For example, if your superior mortgage balance is 0,000 but your home is only worth 0,000 then you are upside-down and may be able to do a short sale to get you out of the property.
2. Why would a lender accept less?
A lender or bank takes a reduction or agrees to take less because it saves them money in the long run. It gets bad debt off their books so they can reinvest that money by giving out someone else loan to a customer. In many cases a short sale is important in order to get you out from under your mortgage debt. By doing a short sale, you will be able to take a large bite out of the money you owe to your mortgage company so that you are no longer liable for the entire amount.
3. What is required?
First you need a qualified, professional short sale agent who knows how to handle this special type of transaction. Your agent will know how to properly get ready the financial container for the bank.
Every lender or bank has its own set of required data and some may even have a set of paperwork exact to them. In general, most banks need at least the following:
- Hardship Letter
- Financial Statements
- 2 Years Tax Returns
- 2 Months Bank Statements
- 2 Months Paystubs
- Profit & Loss Statement (If Self-Employed)
Throughout the process added paperwork may be requested so be sure to keep all things handy.
4. How long does a typical deal take?
Depending on what state you are from, this retort will vary and thl timeline is subject to your lender or bank. Many banks are overwhelmed right now with short sale requests any way most do have an understandable chronicle process. Unnecessary delays can be avoided by not sending incomplete short sale packages. Incomplete offers are often passed over or rejected. Your file is then concluded and you would have to start over from the beginning. It is very important to be sure you provide all things required by your lender and requested by the man helping you negotiate. On average we are seeing most of these deals being concluded in less than 90 days.
5. How much does it cost?
Unlike a former real estate listing where you pay an agent a commission to sell your property, in a short sale transaction the lender pays for the commissions so there is no out-of-pocket cost to you.
6. How long until I can buy someone else house?
There are new loan programs designed to help people who have recently had to short sell their home. You can apply for a home loan in as miniature as two years in case,granted you have maintained your credit with good payment history, kept your debt-to-income ratios within lending guidelines, and have verifiable income.
7. What qualifies as a hardship?
There are many types of hardships that can be considered valid. Here are a few:
- Mortgage rate adjustment
- Increase in monthly expenses
- Need to move
- Reduced income
- Unemployment
- Health issues
- Separation or disjunction
- Medical Bills
- Business Failure
- Business cutbacks or downsizing
- Death of a Spouse
- A valid guess you are unable to make your mortgage payment
8. Can I short sell an investment property or 2nd home?
Absolutely. It is a tasteless misconception that people think they can only short sell their former residence but this is not true! You can do a short sale on your former home, all of your investment properties, and even on your second home.
9. What about my credit score?
There is a lot of misinformation floating out there about credit scoring. You will undoubtedly want to seek a credit master for more data about your situation. In speaking with credit experts ourselves, most have agreed that although a short sale will probably work on your credit in some way it will not be as badly affected as a foreclosure would. A good credit mend company may be able to negotiate any damaging remarks on your credit report. By doing a short sale you can avoid having a foreclosure haunt your credit for years to come.
10. Who can do a short sale for me?
You will need a well-qualified real estate agent to help get ready all your paperwork, list your property, and navigate through the negotiations for you. We also very propose that you consult with a marvelous tax attorney, Cpa, and real estate attorney regarding any hereafter ramifications.
Short Sales - Answers to the Top 10 Most frequently Asked Short Sale Questions