How Does a Short Sale Work?

How Does a Short Sale Work?

A Short Sale is the best way to sell your home if you are underwater on your mortgage.

The way it works is when you go to sell your home, your Realtor negotiates directly with your lender to convince them to take a loss on the principle balance of your loan (i.e., what you still owe)

In order for this to work, your lender needs to be given proof of financial hardship showing why you are unable to continue paying the mortgage.

You Don’t Need To Be Late On Your Mortgage!

It’s a common misconception that home sellers need to actually be in default on their mortgage in order to be eligible for a short sale.

That’s not completely true.

While there are still some lenders that want to see a seller in default, the vast majority will actually consider a short sale where the owner has not stop paying the mortgage.  In situations such as this the lender will want to see proof that default is “eminent”, whether that be due to job relocation, an adjustable rate mortgage (ARM) that’s about to reset, death, family illness, etc.

What Paperwork Will My Lender Need?

Every lender is different but most of the paperwork they require remains the same.  Documentation that a lender will typically require includes:

  1. Authorization Letter Filled Out (Our Short Sale Negotiator will be sending this to you)
  2. Hardship Letter (Stating why you are unable to pay the mortgage, and why the bank needs to do a short sale on your property, signed by all parties)
  3. 2 years of tax returns (They can be requested via 4506-T IRS form, Needed for all parties on the mortgage)
  4. 2 months of bank statements for all parties (full statement, not just the front page)
  5. the last 2 pay stubs for all parties
  6. A full list of personal assets, income and expenditures

Each lender also has their own set of required forms which our negotiating team can provide as necessary.

How Long Does A Short Sale Take?

From the time a home is listed as a short sale to the time it goes to closing takes about 6 months.

How Do I Start The Short Sale Process?

Getting a short sale started is easy.  Simply give us a call at 301-653-8113 or click here to fill out a short sale request form and we will contact you directly to help get the process started.  A short sale is the best way to regain control of your financial destiny and stop your lender from ruining your future credit.


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