Bank Approved Short Sale
Several options now exist for struggling homeowners looking to avoid foreclosure, but a bank approved short sale is no doubt one of the best choices. As a foreclosure alternative, it’s a lot less complicated and does not wreak as much damage to one’s credit score. And with government programs now pushing short sales as a viable recourse, borrowers have lots of resources to help them make the right choice. Read on for some basic information on the bank approved short sale process and what it can do for you.
What is a Bank Approved Short Sale?
In a short sale, your bank basically agrees to accept less than what you owe on your home so that you can sell it at a discount and pay off the loan. This allows them to minimize the loss on what would otherwise be a foreclosure, and allows you to get rid of the mortgage and without having to go through the foreclosure process.
How do I Qualify?
Qualifications for a bank approved short sale vary from lender to lender, but generally, a borrower must have a valid hardship that led to their financial distress. For example, you may have lost your job or fallen ill, making it hard or impossible to keep up. As long as you can prove that the hardship was beyond your control, it’s considered a valid reason.
Most lenders also prefer to short-sell homes whose value is less than what is owed on the mortgage. This is because even with a foreclosure sale, they won’t be able to get enough to cover the unpaid amount. Even if you haven’t missed any payments, you may be able to get a bank approved short sale as long as you have zero or negative equity.
What do I Need?
Specific documentation requirements can vary between lenders, but the most commonly requested are bank statements, tax forms, mortgage bills, and proof of income such as deposits or pay stubs. You will also need to write a hardship letter explaining how you fell behind and justifying your need for a bank approved short sale.
Do I Need an Agent?
Technically, you can carry out a bank approved short sale without any external help. But experts recommend working with a short sale representative who can help you with the process, from gathering paperwork to closing the sale and negotiating with your lender. It may cost you more, but it’s worth the assurance of a hassle-free, successful short sale.
When Should I Apply?
The bank approved short sale process can take several months, so it’s best to act as early as possible. The longer you stay behind on your payments, the harder it will be to resolve the situation and the greater the damage to your credit. So as soon as you run into trouble, call up your lender and start looking for an agent to help you start the short sale process.