The short sale process is often intimidating for homeowners who are facing foreclosure. A short sale is the process of selling a home for less than what is currently owed on the mortgage. It’s a scary process for homeowners, not only because they are losing a home, but also because they are often unsure of how the process works. Simply understanding how these sales work and the steps involved in them can make it a lot less frightening and help you move forward with confidence in the short sale process.
Consider a Loan Modification
There is a chance you may not even have to go through the foreclosure or the short sale process. A loan modification allows you to restructure your mortgage with your lender. Through a loan modification, your lender can adjust the principal, the interest rate, and the term of your mortgage to make it more affordable for you to repay.
Those considering a loan modification are sometimes eligible for the federal Home Affordable Modification Program. This project is overseen by the U.S. Department of Housing and Urban Development. Not all homeowners are eligible but if you are, your lender will place you on a trial plan that typically lasts three months. During this time, the lender will determine if you can make your new monthly payments on time. If you are prompt with payments throughout the entire trial, at the end you will receive a new mortgage and avoid the short sale process altogether.
Ask Your Lender About a Short Sale
As stated previously, during a short sale you will sell your home for less than what is owed on the mortgage. Due to the fact that your lender currently holds the mortgage and will receive less than what you owe, you must first ask them if you can put your home up for a short sale.
To do this, you will need to provide your lender with a short sale packet. This package includes hardship papers that essentially prove you are undergoing financial hardship. You will need to include bank statements and account information, documentation proving your income, such as pay stubs, and copies of your current expenses in the form of utility bills, medical bills, and other expenses. You will also need to disclose your assets.
Hire a Real Estate Agent
Selling your home, regardless of the circumstances, requires a real estate agent. However, you’ll need a real estate agent that is experienced with short sales. Ideally, you should hire someone that is a Certified Distressed Property Expert. This means the real estate agent has completed a course related to short sales and foreclosures.
Once you hire a real estate agent, they will come out to the property and review your financial situation. They will also determine the home’s estimated value and determine an appropriate listing price.
List the Property
Selling a home through a short sale is different in every aspect compared with selling the home simply because you want to move. This includes the listing process. After your real estate agent has determined an appropriate price for the property, they will then list it on MLS (Multiple Listing Service), or another listing service. Once listed, you will likely have open houses and viewings just as you would if it was not a short sale.
However, once you have an eligible buyer, things work a bit differently. After an offer from the buyer has been submitted, your lender must review it. The lender will want to know they are getting a fair price and as much as possible from the property during the sale. Negotiations may occur between your real estate agent, the buyer’s real estate agent, and the lender, but those typically won’t involve you.
The timeframe for this process can vary from four months to six or eight months, depending on if your lender has approved the short sale under the U.S. Treasury’s Home Affordable Foreclosure Alternatives (HAFA) program. If they have, the process won’t take that long. If they haven’t, it will take longer.
Close the Deal
If the lender approves the short sale, you will move out of the home and the new buyer will move in. The money paid by the new homeowner is transferred to your lender to help pay off the mortgage. In turn, your mortgage debt is forgiven. If you qualify for HAFA, you are also provided with $3,000 in moving expenses. If not, you can still feel good about no longer having the mortgage debt hanging over you.
Purchasing a New Home
After selling your home through a short sale, you will likely have to rent a place to live for a little while. This is because lenders will see the short sale and consider you a riskier candidate for a mortgage. As such, you’ll typically need to wait four years before purchasing a new home. However, this is much better than the seven years lenders typically expect you to wait after a foreclosure. In the eyes of lenders, short sales are better than foreclosures. They show that you approached the lender and tried to make things right, and paid as much of your mortgage as you could, instead of simply walking away from your home.
Facing Foreclosure? Speak to the Florida Foreclosure Defense Lawyers Who Can Help
No one ever wants to put their home up for a short sale but sometimes, it’s the best solution for those in a bad financial situation. If you are facing foreclosure, speak to our Fort Lauderdale foreclosure defense lawyers at Loan Lawyers today. We will negotiate with your lender during loan modifications, which may help you keep your home, and help you through the entire short sale process if it comes to that.
This is not a process you have to go through alone. Call us at (954) 523-HELP (4357) or contact us online for your free consultation. Helping homeowners is what we’ve been doing for the past decade, and we want to put that experience to work for you. Contact us today so we can discuss the legal options available to you.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.