This scenario is when the homeowner has closing costs, commission and mortgage balance that outweigh the current market value of the home.
Is a short sale the best option for you? Well…you will be able to purchase a home in 2-3 years vs. 7-10 years with a foreclosure. In many instances the bank will consider this a “performing loan” and you do NOT have to miss payments to utilize the short sale option.
There are some widely accepted scenarios for short sales. They include:
- Loss of employment
- Illness, injury or unexpected medical expenses
- Job relocation
- In over their head with loan from the beginning
- Failed business
- Overextended credit lines
- Military obligations
- Victim of changing economy
What about all this talk regarding a hardship? Well…when we first started working with lenders on short sales, they basically wanted to see one of three things:
- Insolvency. You owe more money than you have cash on hand.
- Financial Hardship. Material change from when you first entered into the loan agreement. You will or have missed payments.
- Monthly Shortfall. Total monthly income – total monthly expenses = monthly shortfall
Well…in recent months we have seen lenders APPROVING short sales with sellers’ that have none of these situations. Again…EVERY LENDER IS DIFFERENT. THERE ARE NO SET RULES.
