Short sales have become a popular alternative for people struggling to keep up with their mortgage payments. But what is a short sale, and do you qualify?
What is a Short Sale?
A short sale is a sale of real estate in which the proceeds from the sale are insufficient to cover the balance of the mortgage and other liens on the property. In a short sale, the lender agrees to release their lien on the property and accept less than what is owed on the mortgage as full payment.
A short sale is an alternative to foreclosure. When a property is foreclosed, the lender seizes the property and sells it at auction to recoup their losses. A short sale allows the homeowner to sell the property on their own terms.
Who Qualifies for a Short Sale?
In order to qualify for a short sale, you must be able to prove the following:
1. You’re Able to Document a Financial Hardship
This is typically due to a financial hardship of some kind e.g., job loss, medical bills, or divorce. You will need to provide both verbal and written documentation of your hardship to your lender. You should also get a foreclosure attorney to help you get started with this process.
2. You Have Negative Equity or are Close to Having Negative Equity
For a lender to agree to a short sale, your mortgage balance must exceed the current market value of your home. This is referred to as being “underwater.” If you are close to being underwater, you may still be able to qualify for a short sale if you can demonstrate that a foreclosure would cause you undue hardship.
3. You Have Stopped Making Your Mortgage Payments
If you are current on your payments, a short sale is almost impossible to get approved. Lenders will only consider a short sale if you have missed several payments and are in danger of foreclosure. If you are in this situation, seek a foreclosure attorney to help you understand your next steps.
4. You Have Equity in Another Property
If you own another property, consult with a foreclosure attorney. The lender may require you to sell that property first before considering a short sale on your current home.
5. You Have No Other Way Out
A short sale should only be considered as a last resort. If you can sell the property on the open market or do a traditional refinance, you should explore those options first with a foreclosure attorney.
Qualifying for a short sale can be a difficult and lengthy process, but it may be the best option for homeowners who are struggling to keep up with their mortgage payments. If you think you may qualify for a short sale, contact your lender to discuss your options.
Contact a Foreclosure Attorney at Mellor Law Firm
If you are behind on your mortgage payments and are considering a short sale, it’s important to seek legal guidance. At Mellor Law Firm, our foreclosure defense attorneys can help you understand your options and protect your rights. We have experience representing borrowers in all types of foreclosure cases, including short sales. Contact us today to schedule a consultation.