Do I Qualify for a Short Sale?

While there are certainly benefits and advantages of a short sale, not everyone qualifies for one.  To determine how you qualify for a short sale, let’s first review what a short sale is.

In simple terms, a short sale is when a mortgage lender agrees to accept less money for a house than the original price for which it was sold.  For example, if you bought your home for $200,000, but it’s only worth $175,000 now, you are short $25,000.  A lender might agree to a short sale in order to avoid a foreclosure.  There is more to it than that, but let’s move on to the main question: How do you quality for a short sale?

There are three criteria a lender will look at to determine whether a person qualifies for a short sale.  Specifically, a mortgage lender will need to know if you have fallen on hard times, what assets you have and whether your home’s value has truly taken a dive.

Financial Hardship

A mortgage lender won’t let just anybody sell their home for less than they’re owed.  A person qualifying for a short sale must be able to prove they have fallen on hard times.  It may be that you’ve lost your job or have become divorced, or maybe you or the loan’s co-borrower have developed a serious and costly illness, or the co-borrower has died, hurting your ability to pay the loan.

No Assets

Some people think a lender won’t approve a short sale unless you’re broke.  This isn’t the case at all.  The mortgage lender just wants to see that you don’t have enough cash to go ahead and pay off the loan, and they want to determine whether you’re going to have a hard time meeting the loan’s obligations.

Fallen Home Value

Lastly, the mortgage lender needs to make sure the value of your home has actually fallen.  That’s kind of the point of a short sale.  If your home isn’t worth less than it was when you bought it, you can’t qualify for a short sale just  by the mere definition of the term.

If you’re considering a short sale, ask yourself these three questions:  Has my financial situation changed?  Am I unable to pay off the loan or keep making payments?  Is the value of my home less than the loan I took out on it?  If the answer to all three of those is “yes” then you may qualify for a short sale.

If you do qualify for a short sale, the mortgage lender is going to want a lot of detailed financial information.  The process for applying for a short sale can be a difficult one, so make sure you contact a qualified short sale expert in your area for help.  If you’re in the Wilmington, NC area, give me a call at 910-622-0319 or email me at nileshjethwa@ec.rr.com.  If you’re not in the southeastern North Carolina region, give me a call anyway.  I can confidently refer you to other short sale experts.