A short sale takes place when the value of the property declines to be lesser than the remaining value of the mortgage. The homeowner decides to sell his property because he can no longer keep up with the monthly payments. In this case, the approval of the lender has to be approved. This is necessary because he has to agree to receive a discounted payment of the mortgage loan. This makes it difficult because the lender often rejects the proposal of the seller.
This is why you have to know how to present a good short sale package. It should convince the lender to approve the proposal. First, you have to understand that the lender wants to minimize the loss, so make sure that you have a decent offer for the property. Make sure you have all the requirements as well.
How to qualify
There are various requirements needed to qualify for a short sale. First, there should be a decline in the property value. This can happen if there is decline in property prices in your area. This may also occur if you neglect your property. Aside from the price, the lender will also check your mortgage. It should be near default or in default. This can be a result of a hard time that you or your family is facing.
Another important requirement is the hardship letter. This should explain the hard time you are experiencing which caused you to miss your payments. Not all hardships are acceptable for the lender. You cannot qualify for a short sale if you are unhappy with the current home you are in or that you want to relocate. Some of the acceptable incidences are unemployment, death in the family, divorce and health expenses.
The lender will also require your financial statement. The lender will check if you have other assets. They do this because as much as possible, they want to avoid the short sale. They do not want to resort to this because of the significant loss they will be incurring. Additionally, there are sellers who are doing this to avoid their responsibilities. Some just want to get an approval so that they can move to a more beautiful home.
If you want to apply for a short sale, remember to be patient as this can take longer. You might even need to reapply for it.
For the buyers
If you are a buyer, purchasing a short sale is a good deal. It is not only cheap but it also shows a lot of promise. However, you need to conduct a research before you make a purchase. It is also essential that you know how much the remaining balance of the mortgage is. This will give you an idea of how much to offer the seller. Finally, if you are going to hire an agent, see to it that he is experienced with short sales to be able to represent you properly.
A short sale property is a good investment. However, you have to be careful when making the purchase. If the lender rejects the first proposal, you need to be ready to increase your offer.
Article Source: ArticlesBase.com - >Short Sale Tips for Buyers and Sellers
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