Phoenix Urban Living News. Real Estate In Phoenix Arizona

Short Sale Your Home

The goal of a short sale is to help you avoid foreclosure if you are no longer able to remain in your home. In the short sale process, you sell your home and settle the debt with your mortgage company for less than the amount that you owe.

The homeowner actually puts the house up for sale. Then a potential buyer submits a purchase offer that the homeowners, and the mortgage company, already know is less than the total balance of the loan.

You then forward the offer to the mortgage company because they will the one in charge of everything. They will review it and make a determination whether, or not, to accept the offer. If they accepted it, the house is sold, and the remaining balance of the loan is usually forgiven.

Short Sales are only considered by the mortgage company when the homeowner is in some sort of financial hardship like a loss of job, serious illness, etc. Plus the monthly payments are delinquent. The balance on the loan is more than the house is worth. And foreclosure will be very likely if there is no intervention.

A short sale benefits the delinquent homeowner because and avoid foreclosure is avoided, there is a settlement of the debt, and damage to the credit is limited. Typically a mortgage holder will choose to do a short sale if they determine it will be a smaller financial loss rather than allowing the loan fall further and further behind, then eventually ending in up in a foreclosure. Short sales are not new and have been around for years. However they are not getting common because of the current U.S. economy and the nationwide downturn in the real estate market.

Adding that is the fact that more and more homeowners are out of work. And, they are behind on the payments, plus their home values declined to the point where they owe more than the house is currently worth.

It is these types of distressed circumstances that must be proven by the homeowner. This is requirement in order for the mortgage company to consider a short sale.

It is important to keep in mind that short sales are purely a financial decision to the mortgage company. If their numbers show a short sale will be more beneficial then it will most likely be approved. But if there are a lot of issues like 2nd and 3rd mortgages, co-owners not agreeing, a current bankruptcy in progress, etc. then they may decide a foreclosure would actually be less of a hassle for them.

If a short sale is approved for the homeowner then there will be no foreclosure showing on the credit report. Instead it will show as a paid settlement for less than the total amount.

Of course, a settlement is not as good as a mortgage paid in full. But it is significantly better than having a foreclosure. And extremely better than totally ruining your credit by just walking away from the home without attempting to resolve the issue, as some people are recently choosing to do.

In closing, the important things to remember are that Short Sales are only for people looking to get out of the home while minimizing the damage to their credit. They are not for those looking to save their home. Short Sales are not automatically approved Mortgage Company. You have to contact them. Then prove that you are in a distressed situation, it is not likely to improve soon, and foreclosure will occur if nothing is done. And, if the mortgage company agrees to consider a short sale, then they will be in control of the transaction. It is important to educate yourself about the short sale process BEFORE you attempt to contact your Mortgage Company. This will greatly improve the chances of them accepting the short sale option.