Mortgage Short Sales As Your Option

Due to economic downturn, foreclosure rates are increasing in the United States

. With a lot of people unable to make their house payments, they are confused on what to do and how to avoid foreclosure on their property. You cannot expect the homeowners to do the right thing and handle this situation without some assistance from someone who knows what to do. There may not be a lot of options out there but homeowners nowadays, can satisfy their debt with less outstanding balance to prevent their home from foreclosure and it is called mortgage short sales.

The rising loan defaults have increased the popularity of mortgage short sales in the recent years. Although, short sales is still not a common way to avoid foreclosure since this can only work if you have a willing mortgage company and a committed buyer.

However, not everyone is aware or has a proper knowledge on what a "short sale" is and how it works. It is basically when the borrower sells the property for less than what is owed on the mortgage. You have to remember that the lender will still have an option to accept, decline or counter your offer. In order for the short sale to be eligible, the homeowner must present some proof of financial hardships that will show that they cannot afford to pay for they mortgage.

Some lender may accept the offer as a pay off to cut their losses as well as avoid the expensive process and time consuming foreclosure. This will then release the borrower from his mortgage obligations. But you also have to bear in mind that not all lenders will accept discounted payoffs or short sales if they will benefit more from foreclosing. Expect that they will have to weigh their losses and they will go for the loss that is less.

Mortgage short sales can be a good alternative when homeowners are behind their payments. This allows you to arrange with the mortgage company to sell the property for less than the amount of your mortgage. But before you even begin the procedure you have to be sure that you have a formal offer from a buyer and the essential papers that you can present to the bank like the letter of hardships, financial statements, tax returns, pay stubs and a purchase agreement.

You will then be contacted by the lender after a few weeks of paperwork. Sometimes they will collect the unpaid debt first and not give the approval. So mortgage short sales can be tricky, and if you dont have enough comprehension on how the system works, you should contact a real estate professional who has more experience in these types of dealings. They will be able to assist you on the negotiation with the lender.

The mortgage short sale process is a great solution for people who are looking for answers to their bad mortgage ordeals. This is usually for the best interest of the homeowner as he can avoid bad credit rating. Short sale may hurt your credit score but at least it will not be damaged as much as foreclosure.

by: Allen Wright

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