Skip to main content

The Short Sale Alternative to Foreclosure

Real Estate Short Sale (Image via Massrealestatelawblog.com)
Most business analysts unequivocally point to the housing crisis as the precipitator of this current economic downturn. According to CNN Money, in 2010, 2.9 million foreclosure notices were filed and more than 1 million people lost their homes to foreclosure. If you are experiencing an economic hardship due to a job loss, disability, unexpected medical expenses, etc., you do not have to be in this number, there are options available to you. If you have received your Notice of Default letter, detailing the lender's intent to sell your property if you do not make your mortgage payments or if you are depleting most of your income, savings, and surplus funds in order to keep a home that is 'underwater', meaning you owe more on the house than what it is actually worth, you have options, chief among them is short-selling. Of course, this is not a desirable position to be in, but as opposed to going through a foreclosure or being an underwater homeowner, petitioning your bank, for a real estate short sale is perhaps the best option for you in light of your present circumstances. It is a proactive solution in what would be otherwise regarded as an abysmal reality. A real estate short sale is basically an agreement between the homeowner (borrower) and the mortgage lender to accept a price that is less than what they owe on their mortgage; in this agreement the property is re-listed and sold at a reduced price (less than the balance due on the loan) and the proceeds are paid to the lender. The remaining balance owed to the bank is called a deficiency and it may or may not be forgiven. A real estate short sale can be beneficial to both the homeowner and the bank because they both have the opportunity to mitigate their losses in some way. Be advised that you cannot just appeal to the bank and expect to be let out of your mortgage; the process is generally similar to what you went through when you first applied for your mortgage. You must apply for a short sale through the bank's loss mitigation department and will need to provide proof to the lender that you are in fact experiencing a financial hardship and/or you are upside down on your loan. In order to get started with the short sale process there are first preliminary items that have to be completed. First, you may need to speak with a tax advisor to determine if their will be any tax repercussions to short-selling your home, because the IRS may consider the deficiency income you would need to pay taxes on. Second, you will need to contact a real estate agent in order to get the ball rolling on selling your home. It’s important to find a qualified real estate agent experienced in real estate short sales, as the process is complex and tedious at times, and you need a professional that can help you navigate the process. Next, once you receive an acceptable offer from a buyer, prepare a submission packet for the bank. Contact your bank for specific instructions (usually the loss mitigation department), but in general what is included in this packet should be the buyer’s offer, a hardship letter (be detailed in this letter and carefully express to the lender the reasons you are experiencing financial hardship and that you are facing foreclosure and/or upside down), authorization to release loan information, listing contract agreement, two (2) year tax returns, W-2, bank statements from the past two (2) months, personal financial statement. You will want to confirm receipt of these documents. At this point, there may be periods of waiting and negotiating, as the bank determines if they agree or disagree with your real estate agent’s valuation. Be prepared to defend your calculations with solid evidence. Also, the bank may have additional questions to ask you about your financial situation, so be forthcoming. Your real estate agent should have set the expectations for the buyer that the property is a short sale and so they realize it make take thirty days to three months (on average) for the bank to approve the deal. Once you get an approval, closing typically happens very quickly, within 30 days. Again, real estate short-selling can appear at the outset very laborious and time-intensive but in contrast to the alternatives (foreclosure and the detrimental hit to your credit rating), this is option can be of a great benefit to homeowners who need to get out of a less than desirable situation. 

Comments

Popular posts from this blog

Why it’s important to save for retirement

While retirement may seem far off in the distance for some, financial experts say you’re never too young to begin saving.  In fact, the earlier you calculate your retirement needs and start building your nest egg, the easier it will be to create a viable plan for the future. Many experts advise you begin saving a percentage of your income for retirement as soon as possible, no matter how little the contribution may be, as it’s possible the Social Security benefits millions of people currently depend on may be in jeopardy.

Low interest credit cards - how to make them work for you

Credit cards are borrowing instruments, unlike debit cards where you already have the money. Banks are there to make money too. Just like high street stores, they hope to maximise their profits within the rules. So it’s important to understand the basics and find a credit card that’s right for you – you can compare low APR credit cards here . Now you know the rules, let’s find out how to play the game. The financial services industry charges interest on the money that it lends out. Let us assume you borrow £100 on your credit card and keep it for exactly one year before you pay it back. For the purposes of this article, we will assume your loan attracts 8% interest per year, which is the Annual Percentage Rate, or APR for that particular transaction. Practical example

Basics of Stock Markets: The A-Z Quick Sheet for a Beginner-Level Investor

Several individuals wish to engage themselves in stock market and invest their money in stocks, but they don’t have an idea about Stock markets and how they work . In fact, there may be lot of info available to you, but they may all seem confusing without actually knowing the basics. This post aims at educating the beginners about the basics of stocks market. Read on to enlighten yourself about the A-Z of stock market. 

Looking For Ways To Finance Your Next Building Project? Look No Further

If you need money to start your next building project, you may be quite surprised by the number of different options you have. However, the options that will actually be available to you will depend on many different factors and these factors will decide how eligible for construction finance you are. In this short article, we will look at what you can borrow, how you can borrow, and what restrictions you might come across. Please note that while the information in this post is correct, your own personal situation will determine what the best course of action is for you. Speaking to an independent financial advisor will help you to see if you are eligible for construction finance and how to go about getting it. Different Types of Mortgages Let’s start with the different types of mortgages that may be available to you. Remember, whether one is better for your needs than another depends on many factors. Commercial Mortgages Let’s start with commercial mortgages because they a

Manage Your Student Loan Debt Better in 2015

Image via gettyimages It is usually seen that most of the students fail to manage their student loan debts efficiently after their graduation. The reason is quite simple. Most of the students spend their earnings on comfort and luxuries instead of repaying their student loan debt. It has become comparatively easy to acquire student loans. However, each one of us should keep in mind the fact that repaying loans are not easy as borrowing it. This is why there arises the need of a proper strateg y when it comes to managing your loans. It is desirable to formulate these strategies while you are still in college instead of waiting until you get a good job. If you are one of this kind, here are some easy tips for you to manage your student loan debt better:

Learn how real estate agents value properties for sale

How do you get into real estate sales? Every owner wants to sell his property for its maximum value. And all too often they end up choosing a real estate agent simply based on who gives them the highest initial valuation. However, this will be a costly mistake. How your home is valued. If you make a mistake in the estimate, it is possible that it will be sold for a price that is less than the real value of the property. On the other hand, even overpriced homes will discourage potential buyers from viewing your home. Also, high selling prices can even result in a long wait before a good deal comes in or does not sell at all. Therefore, titration is recommended as a suitable agent. Here are some things that real estate agents consider during property valuation . But, few factors real estate agents consider when valuing a property. 1. Local services:   During property valuation, one of the main factors that can drive the sale price up is the actual area where the home is located. Aspects

Some Important Questions about Cash Loans in UK

The downfall in the economy has hit us all pretty bad and a lot of us are trying our best to deal with the financial trouble. People are finding it hard to make ends meet. In such a situation, a lot of them resort to taking cash loans just to cope with the problem. But most people do not have enough knowledge about the process. There are some questions that always linger in people’s minds when it comes to taking cash loans in Welwyn Garden City. Here are some of those questions that most people seem to have about cash loans: