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Many consumers are in serious financial situations and must consider drastic changes to right the ship. To some, a short sale of their home is a viable option. Short sales are scary for homeowners, but if you can no longer make the mortgage payments they may be a good option.
A short sale means the lender will take less than the total amount due on the mortgage. It is sort of a compromise with the homeowner so the lender recovers at least a significant percentage of the loan.
Anyone contemplating a short sale should talk with a real estate laws and an accountant so that all details are covered in advance.
If you are leaning toward a short sale, you should also:
- Find a knowledgeable manager at your lending institution who handles short sales.
- Notify your lender in writing of your intent. This way the lender has written confirmation that they can proceed. Your letter should include your name, the date, the address, the loan reference number, the agent's name and contact information.
- Obtain a preliminary net sheet, which shows the expected sale price and the costs associated with the sale. It also includes any unpaid loan balances, outstanding payments, late fees, etc.
- Submit a hardship letter, which describes your financial situation. The hardship letter is in essence a plea to the lender to agree to the short sale.
- Provide bank statements and documentation showing proof of income, assets. Be honest. It is better to make the lender aware of this information up front.
- Obtain a comparative market analysis, which will provide a list of comparable homes and their value in the local market, and it will include homes for sale, pending sales, prices of properties sold the prior six months.
Hopefully the lender will agree to your short sale. Good luck!
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