Kathy & Ben
Short Sales Explained
{[}]You hear about it on the news. Read about it in the paper. People talk about it everywhere. So what is a short sale? The term short sale comes from the home seller being short on paying off the mortgage balance and the mortgage holder/lender accepting something short on what they are owed.
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- A short sale is when a homeowner needs to sell their home and the purchase price is less than the mortgage owed. The seller’s mortgage holder/lender is willing to accept the lesser amount of what is owed.
- A short sale is a contingent sale – contingent upon the seller’s mortgage holder/lender accepting less than the amount owed.
- A short sale is a distressed sale, meaning the homeowner can no longer afford the house payment and/or house due to circumstances beyond their control.
- A short sale allows the homeowner to avoid foreclosure, minimize financial damage, and move on.
- A short sale will have less impact on your financial situation, including your eligibility to secure a home loan and other credit in the future.
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{[}]The term short sale has only recently come into our national vocabulary, even for real estate professionals. The reason being lenders over the last few years have begun to work with sellers and now will accept a short payoff, consequently the term “short sale”. Prior to that the only option for a seller unable to pay their monthly payment was foreclosure or keeps their home thru bankruptcy.{[}]
Changing Times and Attitudes
{[}]The recent recession changed the playing field as sinking home values caused many homeowners to be “under water†(owing more than the home is worth), causing mortgage companies to be overwhelmed with foreclosures. Lenders/mortgage holders have come to realize that they will not lose as much money on a short sale as on a foreclosure and therefore have changed their attitude towards short sales. Further, Fannie Mae and Freddie Mac have developed streamlined short sale programs for their government insured loans, even offering financial incentives to both the banks and homeowners at closing.{[}]{[}]Now let’s be clear, a short sale is not just a “free pass†to get out of making your mortgage payments because you no longer want your home. You must qualify for the short sale thru a definable “hardshipâ€, meaning you are in financial distress. Yet if you qualify, a short sale can be a worthwhile alternative way to sell your home without suffering the financial and emotional consequences of foreclosure.{[}]{[}]Next, we’ll cover “10 Options For A Distressed Seller†and discuss what mortgage companies consider a hardship to allow you to qualify for a short sale.{[}]{[}]If you would like a free, no hassle consultations to discuss and explore your options, we are just a call – 404-314-8129 – or email away. Remember, a short sale is a dignified and effective solution to avoid foreclosure and the damage it can do to you financially and emotionally.{[}]{[}].