More Information About Short Sales
A short sale occurs when a homeowner sells their home for less than they owe on the mortgage. Before a short sale can occur, the lender must grant permission and agree to accept less than the mortgage’s payoff amount. The homeowner must then provide documentation explaining why they cannot pay their loan balance in full. Once approved, the property is listed at its fair market value, and investors who meet the lender’s criteria can purchase it at a discount.
In addition to obtaining permission from the lender, homeowners may be required to make up the difference between what was owed on their mortgage loan and what the investor paid in closing costs. As part of this procedure, the lender will forgive any outstanding loan balance. At that point, both parties would sign documents authorizing the transfer of title and release from liability for any outstanding debts incurred by both parties in this transaction.
Why People Ask For a Short Sale
A short sale is a type of real estate transaction that allows a homeowner to sell their home in an effort to avoid foreclosure. When a homeowner falls behind on mortgage payments and is unable to keep up with the current mortgage balance, they can negotiate a short sale with their lender. A lot of short sales occurred after the real estate boom in the early 2000’s.
A lot of people purchased homes because it was easy to buy a house with loose home buying requirements. Due to everyone buying a house, the prices kept going up which artificially inflated home values. Because of loose lending guidelines, most of the people that purchased a home could not really afford the house payments.
When the real estate market crashed, due to adjustable rate mortgages, a lot of people could not afford their payments. People also could not sell their homes because they owed more on the house than it was worth due to home prices coming down. As a result, people that wanted to avoid foreclosure needed the lender to offer them a short sale to get out of the mortgage agreement.
Home prices are high again, much higher than they should be. There should not be a large volume or short sales this time around because most of the homeowners have very low interest rates on their homes. So even if they owe more than their property is worth, as home values stabilize, it’s still better to stay in the home with a 2% interest rate, instead of selling the house to get another house with a 7% interest rate. Also, most people are not late on their mortgage payments right now. But if for some reason you do need a short sale, contact us for more information.
