Delaware Home Team is here to help. If you are behind on your mortgage payments and aren’t sure of your options, a short sale could be the answer!
What is a short sale?
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.
What is a foreclosure?
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Is a short sale right for me?
1. Are you in a financial hardship?
A material change in your finances between the day your mortgage was signed and today that has affected the borrower’s ability to pay.
2. Do you have a monthly shortfall?
Total monthly income – (minus) total monthly expenses = Shortfall or the total amount of bills that you cannot pay in a months time.
3. Insolvency? You owe more than what you have in cash.
The lender wants to see that over time you (the borrower) will not be able to pay their obligation on the mortgage.
If you’ve answered yes to all three of these questions, a short sale could be your answer to get you out of a bad situation. If you’d like a FREE one-on-one to sit down to discuss your options click here.
Can I purchase a home after a short sale?
Fannie Mae guidelines state that a seller can purchase their next home 2 years after short selling a property. Whereas a foreclosure guidelines state that a seller must wait 5-7 years to purchase their next home after having a property foreclosed upon.
How does a short sale affect my credit profile?
A short sale is reflected as “debt settled for less than the full amount due” on a credit report. The actual impact on the credit score is determined by the level of delinquency prior to the short sale being completed and the credit standing of all other debts. Whereas foreclosure is the most serious impact on credit.
Impact on my neighborhood?
Short sales tend to sell at slightly below fair market value, not causing as much damage to home values in the neighborhood. Foreclosures sell at deeply discounted price, causing continued severe depreciation in neighborhoods.
Will it affect my ability to rent temporarily?
Most landlords view short sales more favorable than a foreclosure when pulling a tenant’s credit and determining the prospective tenant’s ability to pay rent. A foreclosure can impede the seller’s ability to find a suitable property to rent after losing their home.
How is this going to affect me emotionally?
With a short sale, you (seller) are still in control in that you are voluntarily deciding to sell your home and are in control over accepting an offer. With a foreclosure you lose the feeling of being in control and that the bank is forcing you to be evicted from your home.
Worried about being embarrassed by neighbors knowing about the short sale?
Short sales do not carry the stigma that foreclosures do, causing less embarrassment to sellers as they transition out of their neighborhood. With foreclosures, despite difficult economic times, there is still a very negative stigma attached to foreclosures.
Know all of the options available to you, not just short sale and or foreclosure. Click here for more information. If you feel this might be your best route, DELAWARE HOME TEAM is here when you are ready. Do not be afraid and or embarrassed to ask for help!
If you are a visual learner here is a video on the basics of a short sale.