Many feel confused at the constant mention of Short Sales. So, what is a short sale, anyway? Well, first of all, a short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. But to be technical, here’s a more official definition:
A Short Sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagee (homeowner). In other words,
In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Extenuating circumstances delegate whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower’s financial situation.
Who Qualifies?
For homeowners to qualify for a short sale, they must fall into all of the following circumstances:
- Financial Hardship – Situation causing you to have trouble affording your mortgage
- Monthly Income Shortfall – You cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – You do not have significant liquid assets that would allow you to pay down your mortgage
A Short Sale typically is executed to prevent a home foreclosure. A bank will choose to allow a Short Sale if they believe that it will result in a smaller financial loss than foreclosing.
Homeowners often feel overwhelmed and helpless!
- A great place to start, is simply by watching this VIDEO by the U.S. Department of Treasury.
- Stay proactive, keep informed and seeking assistance by professionals can go a long way for homeowners.
- See our FAQs (frequently asked questions) on Short Sales for further information.
- Contact the Short Sale RE Team to further assist and see if a short sale is a viable option.
