What is a Short Sale?
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers.
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than foreclosure or continued non-payment would entail. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure.
Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority has pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion.
Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents an opportunity for "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.
If your mortgage payment is past due you may be headed toward foreclosure, or perhaps you are already in foreclosure, in either case you need to know your rights and the options that are available to you. Only then can you save your house, save your credit or save your equity before it's gone forever.
As soon as you are behind on your mortgage, the countdown to foreclosure begins. The sooner you decide on a course of action, the more cash you and your family can pull out of your house, and the better chance you'll have of stopping the bank from stealing your home.
Can you find enough cash to cure the default and stay in your home?
There are several creative ways to do this if your financial situation has improved and you now feel you can afford the mortgage payments.
Can you get a new mortgage?
You'll need to borrow enough to payoff what's owed to your current lender PLUS the back payments PLUS late fees PLUS attorney's fees PLUS all the closing costs to get a new loan. If you're able to realistically commit to a larger mortgage obligation, this may be an option worth exploring (It of course would depend on credit ratings of the person applying for a new loan).
Should you sell your house now?
You must act quickly because your available options shrink with each passing day. By acting now, you can salvage the most amount of money out of your home.
The single largest reason to take action is to avoid a foreclosure on your record. You can determine which option is best for you and your family, be it reinstating your loan, refinancing your debt or selling your house. But at a bare minimum, avoiding foreclosure should be your absolute top priority. By saving your credit, you won't have to experience the frustration of trying to get a future mortgage, rent a nice house or apartment, or even get a fair insurance quote when you have severely damaged credit.
Do you feel a foreclosure can't be stopped,and that your situation is beyond hope?
In most situations this is just NOT the case and your equity can actually be saved. Even if you have little to no equity, or even negative equity, it still may be possible to negotiate with your lender, possibly generating enough cash to give you something, rather than nothing.
Are you thinking of filing bankruptcy?
Some homeowners consider filing bankruptcy to stop a foreclosure. But it won't. It only delays it while the amount owed grows to an unrecoverable amount. Know that the bank that loaned you the money for your house will get their money, or your house. They're a secured creditor. Bankruptcy will never wipe out your mortgage debt. You cannot avoid foreclosure by filing bankruptcy.
It is not recommended that you try to sell your house on your own unless your loan is current and you have time to test the market.
Time for a fresh start and a brighter future...
Put an end to the stress and emotional hardship you may be experiencing right now. Our Real Estate Experts at Swift Realty will give you information on how to stop foreclosure as well as find out about all the other options that are available to you.
So, take a step in the right direction and contact Swift Realty today.