How To Short Sale Your Home | Mortgage

by GregFord

The goal of a short sale is to help you avoid foreclosure if you are no longer able to remain in your home. In the short sale process, you sell your home and settle the debt with your mortgage company for less than the amount that you owe.

You, the homeowner, will actually put the house up for sale. A buyer makes a purchase offer that you, and the mortgage company, already know will be less than the outstanding balance of the loan.

The mortgage company is the one calling the shots. They will review the offer and make a decision whether to accept the offer amount. If accepted the house is sold, and the remaining balance of the loan is usually forgiven.

Short Sales are usually only a consideration when the homeowner is in some sort of financial distress like a loss of job, serious illness, etc. And the mortgage payments are delinquent. You owe more than the home is worth. And an eventual foreclosure seems likely.

It will benefit you because you avoid foreclosure and you get a satisfaction of the debt. A mortgage company will opt to allow a short sale if they feel that it will be a smaller financial loss rather than letting the loan fall further behind and eventually ending in up in a court foreclosure. Short sales have been around for decades. They are becoming more common now because of the current U.S. economy and the national downturn in the real estate market.

Adding to this scenario is that more and more homeowners are out of work. Plus, they are behind on their mortgages, plus home values have decreased to the point where the homeowners owe more than the house is worth.

Distressed situations similar to these must be established by the homeowner. They are the conditions which must be met in order for most mortgage companies to consider a short sale.

It is important to keep in mind that short sales are purely a financial decision to the mortgage company. If their numbers show a short sale will be more beneficial then it will most likely be approved. But if there are a lot of issues like 2nd and 3rd mortgages, co-owners not agreeing, a current bankruptcy in progress, etc. then they may decide a foreclosure would actually be less of a hassle for them.

If the homeowner is able to get a short sale then instead of a full foreclosure showing on the credit history. The mortgage will be reflected as having been paid off and closed, but with a settlement accepted for less than the total amount.

Obviously, this is not as good as paying off the mortgage in full. However it is far and away better than losing the home to foreclosure. And way better than completely destroying your credit by simply walking away from the home without attempting to resolve the matter first, as some people are choosing to do.

In closing, the important things to remember are that Short Sales are only for people looking to get out of the home while minimizing the damage to their credit. They are not for those looking to save their home. Short Sales are not automatically approved Mortgage Company. You have to contact them. Then prove that you are in a distressed situation, it is not likely to improve soon, and foreclosure will occur if nothing is done. And, if the mortgage company agrees to consider a short sale, then they will be in control of the transaction. It is important to educate yourself about the short sale process BEFORE you attempt to contact your Mortgage Company. This will greatly improve the chances of them accepting the short sale option.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

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