Do You Qualify For A Short Sale

Many times homeowners who do not fully understand what a short sale is might not

think they qualify for a short sale and sadly, in some cases, wind up losing their home to a foreclosure.

What are the criteria for qualifying for a short sale? The first one would be that the balance that is owed on the mortgage(s) is more than what the property is actually worth in todays market. This balance usually includes any penalties and other fees which may have accrued if the homeowner is in default. A homeowner who is considering a short sale must also keep in mind all other liens against the property. These liens must also be negotiated as a part of the short sale.

A second criterion for a short sale is that the homeowner must be able to prove a financial hardship that explains why they can no longer afford their mortgage payments. Examples of financially detrimental hardships are; loss of a job, serious illness, loss of a spouse, divorce or bankruptcy.

It was once a requirement that a homeowner be in default in order to be considered for a short sale. In many cases this is no longer true. It may be possible to complete a short sale while still current on ones mortgage. The homeowner needs to show that default is imminent or that they have no other option then to sell their home. Job relocation would be an example of why a homeowner would have to move.

Lenders will look at a homeowners entire financial position when deciding whether or not to review and approve a short sale request. The lender, for example, will consider a significant balance in a saving account, during their review, and if an owner has significant assets they may be asked to pay some or all of the deficiency balance. This is a critical point during a short sale process and an experienced negotiator can help you negotiate with the lender to get most or all of the deficiency waived in many cases.

Everyones situation is unique; do not hesitate to contact an experienced short sale facilitator, realtor or attorney to discuss your options. An experienced professional in the distressed real estate field will be able to walk you through every step and possible alternative available to help you avoid foreclosure.

by: Kimberly Harrington

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