What is a Short Sale?
A Short Sale is the sale of a home in which the sale price of the home is less than the balance owed on the property’s mortgage. When a homeowner cannot afford to pay the mortgage payments anymore, the seller’s lender decides that selling the property at a controlled loss is better than a foreclosure on the property. Both parties, seller and lender, consent to the short sale process because it allows them to avoid foreclosure. A Short Sale benefits both parties as foreclosures involve hefty fees for the lender and negative credit report outcomes for the homeowner.
If I do a Short Sale, how much will I have to pay to sell my home?
In most cases, the seller will pay ZERO sales costs if their lender approves the Short Sale. All commissions, title and escrow fees, and even some repair expenses are paid by the lender as part of the Short Sale approval. In other cases, the new buyer of the home would cover some of those said expenses.
How will a Short Sale affect my future ability to buy a home?
You will be in much better shape than having had a foreclosure. Fannie Mae federal home guidelines state foreclosure recipients are ineligible for a mortgage for 5 years, versus only 2 years for Short Sales. For private loans, its 7 years of ineligibility after a foreclosure and only 2 years ineligibility after a Short Sale. Mostly all mortgage applications ask if you have had a foreclosure in the past 7 years; however, there is no such question for Short Sales.
How will this affect my credit score?
For a foreclosure, your score will typically drop 250 to 300 points and will affect your score for 3 year. For a Short Sales, typically a “Paid for less than full amount” or “Paid as negotiated” is reported and can drop your score as little as 50 points and will only show on your report for 12 to 18 months.
How long does a Short Sale take?
Prior to November 1, 2012 a Short Sale would take 60 to 120 days or longer to complete. The entire process can be complex because multiple parties (you the seller, the banks, and the buyer) all need to agree on the price and terms of the sale. As you can imagine the more mortgages companies involved the longer the process.
As of November 1, 2012 new guidelines have been released by the Federal Housing Finance Agency which has expedited the process of a Short Sale. This is a huge stepping stone for homeowners in need, Investors, the housing market and the economic growth of the community. One change that was made permits a homeowner with a Fannie Mae or Freddie Mac mortgage to sell their home in a short sale even if they are current on their mortgage as long as they have an eligible hardship, such as death of a borrower or co-borrower, divorce, disability, or relocation for a job without any additional approval from Fannie Mae or Freddie Mac. This one change makes a huge impact for the homeowner, saving them time, money and the risk of having their credit ruined. To read all of the new guideline changes please click this link: November 1, 2012 New Short Sale Guidelines
If you believe a Short Sale might be your best option, act quickly. Don’t delay! If you wait until one week before the foreclosure date, you’ve eliminated your chance of saving your credit with a short sale. DO NOT WAIT!
How do I get started on a Short Sale?
It’s easy! If you would like to speak to someone about Short Selling your home, Clean Green Real Estate is happy to help. Call us at 724-207-1129 or contact us online here at: Short Sell Your Home. There is no cost to get started. It is as simple as contacting us and we will do everything we can to help you avoid foreclosure.