The idea of a short sale may not be so short after all. A short sale is so called because the mortgage company or lender is willing to sell the house “for less” than the full loan amount owed on the house. This process is not accepted or permitted by all lenders, but for homeowners who have chosen a short sale and have been approved by the mortgage company, there are a few things that need to be taken care of before the home can be put up for sale. .
A short sale leaves the lender with less money than originally owed. For this reason, the lender will want to collect financial information on homeowners before approving final clearance for the short sale. These financial documents will need to show that the homeowner is in dire straits and clearly will not be able to pay the current mortgage. This means holding nothing back and having no pride. Every financial burden placed on the family must be carried to the point of sheer sadness. The lender needs to know beyond a shadow of a doubt that a short sale is the only option other than foreclosure.
When the lender receives and approves the financial details, the next step will need a little help from a real estate agent or real estate expert. The lender will want more finance. But this time, the numbers will have to prove that the home sale will leave zero profit for the homeowner. If the owner is owed money at the end of the net profit sheet, the short sale will not be approved.
After all finances are established and approved. The homeowner is not out of the woods yet. When the house is sold, if there is a balance difference between the amount of money paid to the lender for the house and the amount owed on the mortgage. The lender has the right to demand that money from the homeowner. No matter how large or small the sum, the remaining mortgage balance is ultimately the homeowner’s responsibility.
A short sale can feel like a get out of jail card. But there are careful planning steps, financial evaluations, and the possibility that you may still owe money at the end of the sale to worry about for the homeowner. There are times when a short sale is not the best option, but this should be discussed with your lender and real estate agent.