Having your own house is an amazing thing that many dream of. Many will grab the opportunity to have it if they were given the chance. A mortgage loan becomes one way to realize your dream home.
However, not everything in life is going according to plan. There might be hiccups along the way that lead you to have a financial setbacks thus, hinder you the ability to make a payment. One of the solutions to avoid a total loss in your property is by doing a short sale.
What Is A Short Sale?
Short sale is a process to help homeowners that’s on the brink of losing their home. Homeowners that are struggling financially can get out of their debt by selling their home. Instead of facing a foreclosure, which will make your credit score to tank, short sale is the better option. You can save your credit score to not be as bad and hopefully will also get the benefit from selling your house.
This helps homeowners tremendously by setting up an agreement with their lenders to sell their property at set prices. Usually, the price that they offer is less than the debt that they owe. This is because short sale houses are typically priced under the market. The strategy is used to attract many house hunters, especially first-time buyers and investors to get the sale quickly.
Doing short selling to your house will save you from having to foreclose on your house. By doing that, you will be clear of the money that you owe on the mortgage while also at the same time saving your credit score. Although in the end, you will still have to let go of your house, this is a better solution from you and your family member. You will be financially and emotionally a lot better than having to go through a foreclose.
The Short Sale Process
If you’re thinking about short sell your home, you first have to file a hardship letter to your mortgage agency. State about the reasons and the factors of your financial setbacks. Tell a legitimate and genuine reasons about your hardship. Some of the examples that lenders that usually get approve are loss of income, divorce, a medical emergency, bankruptcy, death, and so on.
In your letter, make sure to also includes that your request on why the mortgage can’t be fully paid and the intent on wanting to short sale your house. Your letter will then be reviewed and hopefully get approved by your lenders. Some banks and lenders along the process might require you to complete documents of a letter of authorization, a preliminary closing statement, and etc.
It usually takes 10 days to a month to review your letter. If yes, then you will have to go through a negotiation process with your lender about a broker price option in which you and your lender both have to agree on. The bank that supervises the process will issue a short sale approval letter which takes about two to eight weeks. You can speed up the process by hiring a short sale agent that make sure your file is staying on top and holding the bank accountable.
Check-in with the bank to make sure that your letter is being processed and whether or not your house is going through the sale right now. Ask your short sale agent about the estimated time on when your home will get the final review and when the process begins. At that time, you can take another loan to cover the short payment of your debt. This will ensure that you will be final with this lender.
Pro and Cons of Short Sale on A House
If you’re a seller, many advantages can save you from a total financial setbacks. The most obvious one and probably the saving grace is that your credit score will be in a good hand. Unlike foreclose, which puts you on a place where you can’t come back from it because it stays on your record, short sale isn’t. Short selling your house allows you to buy another house without having to wait while foreclose, typically you have to wait for seven years.
When you put your house on short sale instead of foreclose, you can avoid the trauma of going through foreclosing a house. You won’t have to face being forced out of your house unwillingly. Just imagine the stress level and the embarrassment that you have to go through.
Short sale will save you and your family from having to experience all of those horrible things.
You will also save a ton of money. Foreclose forces you to pay out of pocket money to fight the battle with your lender. There are also so many penalties and fees being charge if you’re going through a foreclose. With short sale, you will be able to lessen your burden from all of those financial losses.
The fees and the commission charged will be burden to your lender instead.
But, beware of the drawbacks too. You need to have lender approval if you want to short sale your house. This might not be something you can easily get approved of. There are many documents that you need to fill out.
Another thing that might be the most jarring one is that you won’t be able to pocket any money resulted in the sale of your house. All the money will go to your lender. If it doesn’t cover all of your debt, you might still be having some debt left to pay to your lender.
Facing a financial problem is a possibility that a lot of people might be facing. A short sale might be the solution for your inability to pay mortgage. But there is a greater solution for that, which is saving. Instead of buying your home on a loan, you can avoid getting evicted from your own place by buying them with your own money upfront.
With responsible planning and financial saving, you will get your dream house in a few years without having to worry about any debt at all!