If you’ve found yourself in the position where you’re having to consider foreclosure on your home, you’re probably spending a lot of time trying to learn about other options. One good option for many homeowners is to sell their home through a short sale.
A short sale might be available to you if your home is worth less than the amount owed on the mortgage. In general, you must show financial hardship such as death, divorce, or lost income to qualify for a short sale.
There are several ways to approach a short sale, and knowing which fits your situation best can help make the short sale successful:
Traditional Short Sales: In a tradition short sale, you find a buyer and set the price, then ask the bank if they’ll approve it. You may have to pay the bank the difference between the selling price of your house and what you still owe on your mortgage. Traditional short sales do not usually have a high success right for the seller.
If you’re considering selling your home through a traditional short sale, you should retain the services of a good realtor and a good real estate attorney. A real estate agent will be able to help you screen potential buyers and help determine whom the banks might be willing to work with.
In general, banks want buyers who are buying with cash or who are already preapproved for a line of credit and who have no purchase contingencies, such as selling another residence before buying yours. A real estate attorney will be familiar with the terms of a closing agreement that a bank would likely find favorable to a short sale agreement.
HAFA Short Sale: Home Affordable Foreclosure Alternatives (HAFA) short sales are available for homeowner’s whose mortgage is backed by Fannie Mae or Freddie Mac. In an HAFA short sale, you are free from any remaining mortgage debt after the sale of your home, even if the sale price is short of the mortgage amount that you still owe. HAFA short sales are not as hard on your credit score as a traditional short sale.
Preapproved FHA Short Sale: If you have a Federal Housing Administration (FHA) home loan and are experiencing a hardship that is preventing you from being able to pay your mortgage, you might be eligible for a preapproved FHA short sale. In this instance, you work with your lender to set the terms of your short sale, thus ensuring that your lender already approves the sale. Then you work with a real estate agent to sell your home at the bank’s terms.
Preapproved Short Sale: If you don’t qualify for any government short sale programs but still want to avoid a traditional short sale, you may be able to work with your lender for a preapproved short sale. You may want to talk with a real estate attorney who can help you negotiate with your bank.
Short sales can be a good alternative to foreclosure, but they require you to be educated about the many options available and to proceed wisely. If you aren’t sure about how to approach a short sale, consider talking with a real estate attorney who can assess your situation and determine the best course of action for you to avoid foreclosure.
