Any number of situations can cause a person to become unable to afford a home. Some are out of our control—such as a shifting economy, changes in job availability, and cuts to paychecks. Mortgage lenders are aware of this and provide an array of tools for homeowners to use before foreclosure becomes the only option. For homeowners with underwater mortgages, one such opportunity is the ability to sell a home back to a buyer through a short sale. While this may sound like a great opportunity, you must weigh it carefully. Ahead, we present our top three things to consider before starting the short sale process.
Understanding Short Sales
When a person comes to a point where they need to consider options such as short sales, it’s likely a difficult situation. However, you shouldn’t stumble over the stress. Short sales are an excellent way to alleviate the burden of mortgage debt, but only in certain circumstances. For instance, you must consider a few short sale tax implications first. You may also have other options, like social programs, forbearance, or even refinancing.
Working With a Negotiator
The process of short sales is generally more complex than obtaining the original mortgage loan. While many people have knowledge about real estate and negotiation, few understand the multiple complex steps to getting a short sale approved by the lender. One of the most significant things to consider before starting the short sale process includes the type of professional help you’ll seek. Generally, the options lie between real estate agents with short sale experience, attorneys with real estate specialization, or third-party negotiators.
Meeting Short Sale Requirements
Before the short sale process can even begin, homeowners must qualify. A short sale is not available to every homeowner. Short sales exist as an emergency option. Homeowners should only apply when under a crisis. For example, short sale negotiations usually begin as a result of job loss, permanent cuts to wages or hours, a job relocation, or a similar unavoidable situation that makes paying for the home impossible. What’s more, it will typically cause the lender to lose money on the loan, so they have the final say on accepting.
To begin a short sale process, homeowners should first ensure they really understand what a short sale is. Short sales are an opportunity to sell a house for less than it’s worth, and this often carries other tax implications as a result. Furthermore, it’s not something that the average homeowner does on their own. A negotiator with real estate and short sale experience should discuss with the lender on behalf of the homeowner. And it’s not a decision that’s entirely in the hands of the homeowner. They must first meet prerequisites to be considered. Lastly, it’s up to the lender to accept short sale proposals.