Short Sale Is Alternative To Foreclosure

Short Sale Is Alternative To Foreclosure And Better To Qualify For Conventional Loan After Short Sale:

A short sale is when a homeowner sells the property at a price below what he or she owes the mortgage lender with the lender’s blessing because they can no longer afford their monthly payments.   A short sale alternative to foreclosure and homeowners who can no longer afford their mortgage payments should consider a short sale. There are cases where homeowners who are not delinquent on their mortgages qualify for short sales because they are over extending themselves or have lost their jobs or had major reduction on their household incomes where they can no longer keep up with their current home loan payments.

Short Sale Is Alternative To Foreclosure: How Do You Qualify For A Short Sale?

In order for a homeowner to be able to do a short sale, they need the mortgage lender’s approval and acceptance.  By agreeing to a short sale of a homeowner, the mortgage lender is willing to accept less than the current balance of the mortgage loan borrower’s mortgage balance and take the loss without going after the deficit against the homeowner.   Not all mortgage lenders will offer their mortgage loan borrower short sale approvals.  A mortgage lender can opt to foreclose instead.

Consult With Accountant Prior To Short Sale

Before pursuing a short sale, make sure you consult with an accountant or attorney that you will not get stung by the Internal Revenue Service for being taxed on the debt forgiveness by the mortgage lender.

Short Sale Is Alternative To Foreclosure And Short Sale Process

Every mortgage lender has their own short sale processing system.  In general, if you have made up your mind that doing a short sale on your home is the route you want to take, you need to contact the mortgage lender and speak with an agent.  Take notes on who you speak with, the date, the time, and notes of the conversation.  You might need to speak with various representatives.  The mortgage lender representative will probably require you to write them a letter of explanation on why you are seeking a short sale.  You will probably need to write a letter of hardship that you can no longer afford the home due to extenuating circumstances such as a loss of business, loss of job, or medical reasons.  The mortgage lender will also require that you provide them asset, debt, and income information along with recent bank statements.

Short Sale: Market Value Of Your Home

Most homeowners who seek a short sale on their property is due to the fact that they cannot sell their properties because the mortgage balance is higher than the market value of their property.  You will need to provide a market analysis of your property which your real estate agent can help you with.  If you can provide a recent appraisal of your property, it will even be better, however, you will most likely have to pay for the appraisal.   Once you get the approval from the mortgage lender for the short sale, you can then list your property with a realtor.

Listing Your Property And Real Estate Purchase Contract

Once you have your property listed and get a real estate purchase contract from a potential home buyer, you will need to present the real estate purchase contract to the mortgage lender.   Your mortgage lender will be the party who decides to accept the offer or not.  Once your short sale is finalized, your waiting period will start for you to qualify for another mortgage loan.  Waiting period after a short sale for a FHA insured mortgage loan is 3 years from the date of the settlement statement.  For a conventional loan, you can qualify to purchase a new home after two years from the date of the HUD as long as you have a 20% down payment.  You may qualify to purchase a new home after a one year waiting period via HUD’s FHA Back to Work Extenuating Circumstances due to an economic event if you were unemployed or underemployed which resulted a net household income reduction of 20% at least six months prior to the initiation of the short sale.  If you are interested if you qualify for the one year waiting period FHA Back to Work Extenuating Circumstances due to an economic event, please do not hesitate to contact me at 262-716-8151 or at www.gustancho.com .

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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