What is a Short Sale?
If you own a home with a mortgage and need to sell, you might be selling short...what does that mean? If your home is now worth $500,000 and your loan balance is more than the value, then you would be paying back more than you can currently be paid by a new buyer. Sometimes the lender will "forgive" the amount that is "short" in paying off the loan. There are certain conditions that will allow a lender to do this. Just because you owe more than your home is worth does not automatically qualify you for a short sale. Your credit scores may go down, but usually recover quicker than a foreclosed home.
Some of the hardship situations that will help you qualify include loss of job, death of mortgagor. decrease in household income and having a government backed loan. These include HUD, Freddie Mac, and Fannie Mae. Most bank loans are routinely sold to one of these entities and still serviced by the original lender. You will need to check on this before considering a short sale alternative. Ask your Realtor® if they have taken any special courses geared to procuring a short sale.
If you are thinking of buying a home that is a short sale, be prepared for a long wait! Short sales can take several months. Unlike a traditional sale where you negotiate with the owner, the bank or possibly two lenders and their investors decide if your offer is acceptable. And they may take 60 days to decide that your offer is not acceptable. The general thought is that one in three short sales actually result in a home purchase. Be sure to pick an agent who successfully closed a short sale.
Some of the hardship situations that will help you qualify include loss of job, death of mortgagor. decrease in household income and having a government backed loan. These include HUD, Freddie Mac, and Fannie Mae. Most bank loans are routinely sold to one of these entities and still serviced by the original lender. You will need to check on this before considering a short sale alternative. Ask your Realtor® if they have taken any special courses geared to procuring a short sale.
If you are thinking of buying a home that is a short sale, be prepared for a long wait! Short sales can take several months. Unlike a traditional sale where you negotiate with the owner, the bank or possibly two lenders and their investors decide if your offer is acceptable. And they may take 60 days to decide that your offer is not acceptable. The general thought is that one in three short sales actually result in a home purchase. Be sure to pick an agent who successfully closed a short sale.