Are you or someone you know thinking about selling a home? Home sellers who’s total mortgage balance is greater than their home value face a dilemma, when they are ready to sell.
This is when a short sale takes place,
When a homeowner is selling their home but their mortgage balance owed is greater then the sale price and the lender takes a loss.
For example…
A recent client of mine, a home seller in The Bronx, New York. He purchased a house in 2005. He took out a mortgage for approximately $500,000.00. Years later they decided to sell in a down market.
He hired me as his real estate agent in the Williamsbridge section of the Bronx. I had the house appraised to find the value. We compared it to other homes for sale in the 10469 zip code. The value was $425,000.00.
We soon found a buyer willing to pay $425,000. We notified the buyer that this was a short sale. You never know how long it takes to negotiate a short sale.
We needed the sellers mortgage lender to agree to accept less than what is owed to them. I successfully negotiated the short process with the home owners lender.
Beginning the short sale process
Step One : Find Out What’s My Home Worth in (New York or Connecticut) Get a FREE home evaluation from Marc Giles.
Be clear, the only person who can approve a short sale is the lender who is owed the mortgage. Negotiating a short sale in the Bronx is unique. Each state has their own laws.
Because I am also a licensed mortgage loan originator. I understood the language the mortgage lender speaks. I was successful getting the the short sale accepted in a timely manner.
I’ve heard stories of lenders denying short sales, or taking up to a year to approve a short sale.
Some things to know about the short sale process:
Short sales tend to be lengthy and paperwork-intensive transactions, taking up to a full year to process.
Negotiating a short sale is similar to the mortgage application process. Be prepared to provide your bank statements, income statements like 1040 tax returns, w2 statements, and paystubs.
A homeowner does not need to be behind on mortgage payments to negotiate a short sale, but could be.
A shortsale is not as detrimental to a homeowner’s credit rating as a foreclosure is.
A short sale looks better than foreclosure to future lenders and creditors. It shows that the person took action before the bank moved to repossess the home.
FAQ
Can I get a mortgage after completing a short sale?
Yes. Each Lender has rules regarding the waiting period after the short sale. But, I have been successful helping homebuyers (who qualify), finance a home after they completed a shortsale.
Does the mortgage bank have to give me a shortsale?
Each lender is different. Only your lender can agree to accept a short sale. Typically a bank, needs documentation that explains why a short sale makes sense. After all, the lending institution could lose money in the process. It’s good to have a knowledgeable person negotiating in your behalf.
Will a short sale hurt my credit?
Yes. Completing a shortsale is not as detrimental to a homeowner’s credit rating as a foreclosure. But, A short sale looks better to future lenders and creditors in comparison to the foreclosure.
Completing a shortsale shows that the homeowner took action and worked with the mortgage bank instead of walking away.
