Qualifying for a short sale: what you need to know
Facing the possibility of losing a home in foreclosure can be a devastating blow to any homeowner. However, it is not one that typically comes as a surprise to anyone considering the fact that it comes on the heels of multiple missed mortgage payments.
With this in mind, homeowners should know that there are ways to avoid foreclosure and pursue alternatives before the process is in full swing. One such option is a short sale. If you want to avoid foreclosure but do not want to keep your home, you should consider the options for short sales.
A short sale occurs when a home is sold for less than what remains on the mortgage. In order to pursue a short sale, both you and your lender must agree to it and you must meet a number of criteria.
As noted in this article, there are three factors that must be in place to qualify for a short sale.
- The home must be valued at less than what is owed for the mortgage
- You must be able to prove that you are experiencing significant financial hardship
- You must not have any assets that could be used to pay down the balance
If these factors are identified and you are in default or are almost in default, you can generally qualify for a short sale.
In the event that you are allowed to pursue a short sale, you should know that it isn’t something that is guaranteed. The home may not sell; your lender may not approve of a proposed offer; deadlines can be missed and the deal could simply fall through.
Considering all that may be at stake when it comes to short sales and other foreclosure alternatives, it can be crucial that you have the information, guidance and support you need to make sure your bases are covered. Working with a lawyer can help you pursue the best available options and avoid costly mistakes.