Most people buy a house with the intention of making it their home and living in it for many years. Sometimes there are events in peoples lives that they have no control over. These could be good or bad, but there is very little that can be done about it.
The value of properties shot through the roof a few years ago. It has since declined due to the global economic recession which has affected homeowners in other ways as well. Some of these property owners have lost their jobs and now cannot afford to pay the high mortgage payments. For some of these property owners, it is not a problem. All they have to do is put their house on the market and sell it. Some property owners have a problem though, because their property is simply not worth what they owe on their mortgage, making it difficult in selling your house. Sometimes they are lucky to obtain enough to cover the mortgage, but the selling price does not cover the other costs involved in selling your home.
What Happens if Your Property Does Not Have Sufficient Value?
If your property does not carry sufficient value to cover your expenses, you may have to default on your loan or declare bankruptcy. You may even have to allow the bank to foreclose on the property. There is an alternate option which is called a short sale. This happens when your lender is willing to accept an amount that does not cover your mortgage loan.
Lenders often lose money when they foreclose on a property. They often lose more money through foreclosure and selling the house as a bank property than they would if they used a short sale transaction.
Rules for a Short Sale
There are specific rules related to a short sale.
1 The borrower must be going through a genuine financial struggle. If this is the case, you should communicate with your lender to enable them to put it on file.
2 At some point, you will be required to provide the lender with documents indicating that you are indeed struggling. This may include bank statements, tax returns or pay slips.
3 You will have to put your property up for sale.
4 When you list the property with your realtor, he or she normally prepares a market analysis comparison. A copy of this document, along with your hardship letter, other documents as mentioned before, a copy of your purchase agreement and a sheet indicating the budgeted profit or loss from you property sale, should be sent to your lender.
You could opt for your realtor or attorney to negotiate your circumstances with your lender. If you do, they will require a letter of authorization to do so. Once all the documentation has been submitted to your lender, all you have to do now is wait for a response.
Your lender is often not able to make a decision on your case on their own. If other entities are involved, they have a say in the decision making process. Your chances of obtaining a positive response from your lender increase greatly if you appoint a professional to undertake the negotiations on your behalf. Click Here to contact us to help you achieve a short sale with your lender.