A short sale is when the homeowner is experiencing a financial hardship of some kind and is no longer capable of paying their mortgage payments and is upside down on their mortgage. What this means is that the amount the homeowner owes on their mortgage is greater than what the home is actually worth in today’s market. In most cases where a homeowner is considering a short sale of their home they are experiencing a loss in pay due to loss of job, or loss of hours, divorce or death in the family in any case there should be a legitimate reason for their hardship and not just because the homeowner wants to get out from under there upside down mortgage.
Now let’s say that the homeowner has stopped paying on their mortgage and it has been a month or two of non payment and the homeowner is getting calls from their lenders and receiving letters hopefully offering some assistance. The homeowner may want to start responding to these calls from their lender and see what programs they have to offer them at this time. In most cases the lenders may work with the homeowner and start them on a forbearance plan. This is no more than lowering your payments for a couple of months to see if you can get back on your feet within the time frame given. The amount the lender lowers the payment may be substantially less than what you usually pay but the each month but the lender will be tacking on the remaining amount that you are not paying to the end of the loan. You will have to follow this forbearance to the letter and one late payment and you will be cancelled out of this program.
Once you have stopped paying on your mortgage the foreclosure timeline starts ticking away. The timeline I am speaking of is this 120 days after a homeowner stops payment on their mortgage the homeowner will receive what is called a Notice of Default letter. From the date on the Notice of Default letter the homeowner has another 120 days more in which to resolve the non payment issue. The homeowner may resolve this issue in a number of ways Forbearance, Modification, Short Sale or Deed in Lieu of Foreclosure other wise the property will be in foreclosure after that time and the homeowner will have to vacate the property.
To short sale your home the homeowner will need to gather the following information. Most recent mortgage statement, two most recent paycheck stubs, two most recent bank statements and the last two years of their tax returns. Once you have all these items you will need write out a one page explanation of the reason for your hardship. Then on a seperate sheet of paper write down your income and expenses, which should show more debt than income. Once you have completed all this you will need to contact an experienced Realtor in short sales to list your property whom will list your property on the market at current market value and then the Realtor will submit all documents that you have gathered to your lender.
IMPORTANT INFOMATION: If you are able, and in most short sale cases you should be able if you stopped making your payments IT IS IMPORTANT TO maintain paying all utilities and any Home Owner Associations etc you do not want to have a lean placed on your property during the short sale process and this is what will happen if you do not pay these
This will conclude this first portion of JNC Realty Groups short sale process information session of the blog. Please look for our next blog as we will be continuing this session on the second part of this process or for more information right now please contact us through our web sight at JNCRealtyGroup.com or JCarrion@Century21.com