The time may have come when you need to sell your home, even though it is a down market. Maybe, you have lost your job or experienced some other life changing event that has greatly impacted your ability to maintain your mortgage payments. The challenge, faced by many homeowners in this situation, is the mortgage owed is greater than the selling price (value) of the home. In this case, a homeowner may be facing a short sale.
Short sales exist for those situations where the net proceeds from the sale of a home will not cover the mortgage and closing costs to sell the home. In these cases, the seller does not have any additional funds available to cover the deficit, such as savings, stocks and other investments, or other assets. Within a short sale, the seller works with the lender unlike a foreclosure where the lender takes the title of the home through a lengthy legal process.
So, where would a seller start if they felt they fell into the categories described above?
1. Consider a Loan Modification: If you are considering a short sale because of a financial difficulty that may be temporary and you really want to stay in your home, you should contact your mortgage lender to discuss a loan modification. Through a loan modification, several options may be available:
- Refinancing the home with a lesser interest rate
- Manipulating the payment plan to allow the seller to ‘catch up’ on payments
- Provide a forbearance period if the situation is temporary
- Work with you through a Short Sale Qualification Interview to determine where you stand and the best next steps
- Have a clear understanding of what is required in a short sale package and help you to collect and prepare the package
- Have professional relationships established with real estate attorneys and title companies who are experienced in short sale transactions
- Have a clear understanding on how to get your property sold via an established marketing plan. Furthermore, how to best price your home for a quick sale that will, most likely, be approved by the mortgage lender
- Have an established system to deal with the lender’s loss mitigator