Is A Short Sale The Way To Go

Dated: 08/21/2014

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A short sale is for those who do not qualify or do not want to refinance their home mortgages. In this situation the seller can accept a lower bid for the property to increase the chances of a quicker sale. This requires that the lender agree to accept a payment lower than the balance owed on the mortgage. The lender takes a loss but gets at least some (or even most) of its money and both parties avoid foreclosure.  Short sales can be a long and complicated process and require a streamlined communication line between seller and mortgage lender. Most creditors require that the borrower show that financial hardship is preventing them from making mortgage payments. Different creditors require varying conditions and documentation, so be prepared to negotiate. A good way to start is by gathering a letter of authorization to allow your agent to get information from your lender, a closing net sheet, proof of income and assets, copies of bank statements and a comparative market analysis. Once you receive an offer from a potential buyer, you must contact your lender and ask for approval for that specific offer.  If you are a seller the most obvious advantage of short sales is avoiding the lengthy foreclosure process and its impact on your credit score. You will also avoid having to pay the full balance of the loan you can no longer afford, though you may be stuck with a tax bill for the canceled debt down the road. For buyers, the biggest advantage is the prospect of buying a property at a big discount. Short sale homes usually are in better shape than foreclosures, with more cooperative sellers. If you are considering purchasing a house through short sale, you can sometimes get a great deal. But there are some special considerations that you will have to consider. For example, not all short sales are great deals — it’s a good idea to factor in the cost of any necessary repairs or of the tax ramifications before you sign on the dotted line.  It is first important to understand that not all lenders will agree to consider the loan balance paid or approve a short sale. Sellers should receive a solid commitment from lenders before moving forward with potential buyers. Also, even though you are avoiding a foreclosure, short sales can affect your credit scores, and you should work with the lender to figure out how the process will be reported to credit agencies.  As a buyer, short sale homes can be more complicated; it’s a good idea to consult a real estate agent or attorney to help with the deal.
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Michael Krivacs

I grew up in Beach Haven on Long Beach Island and graduated from The American University with a BS in Business Administration. While in college I met my wife Holly. After school I worked as a Wage ....

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