Considering a short sale on your home?

Gloria Bumanglag, GRI

 

Short Sale

If the market value of your home is less than the amount owed, the proceeds of the sale will go towards your mortgage and the costs needed to sell (includes escrow fees, title fees, broker fees and others).    This will avoid the legal process of foreclosure. 

With the voluntary and state imposed moratoriums on foreclosures, and the costs associated with it, banks will now be more willing to negotiate a short sale. 

If you are current and able to make the monthly house payment, keep doing so.  Some lenders have made new loans to previous sellers who did not miss a mortgage payment less than two years after the short sale. 

Owners with homes that have been foreclosed will have to wait five years for their next home purchase.  Owners who have walked away from their homes simply because they were upside down in the property will be forced to wait seven years or longer.  Consult with your attorney, Certified Public Accountant or other expert regarding possible consequences of a short sale. 

If your home is a condominium, you must contact a realtor experienced in short sales right away.   After December 31, 2010, condominium projects will lose their approval status for FHA loans and must get recertified.  

While you are deciding who to list your home with, you can start collecting the items needed for your seller financial package.    Buyer’s agents (also known as selling agents) are interested in showing properties where the sellers are motivated, cooperative and have their financial package completed.  You will need to collect the following…

1.     Two Most Current Pay Stubs or in Lieu of pay stubs, a Letter of Self Employment with a Profit &   Loss Statement for the last 6 months or a Letter of Unemployment.

2.     Most Current Bank Statements (last two months)

3.     Last 2 Years Federal Tax Returns or 1040 Extension form(s) for unfiled years(s).

4.     Seller/Borrower Hardship Letter (most important points only, date and sign)

5.     Financial Work Sheet - Monthly Income & Expenses

6.     Copy of recent bank statements on current Mortgages and Home Equity Line of Credit (HELOC)