You might already know the qualifications for filing for a short sale:
- The market value of your home has dropped
- Your mortgage is in default (or close to it)
- You have no assets
- You have fallen on hard times
Most of those are pretty straightforward, but what does is an acceptable hardship for the “hard times” qualifier? First, let’s look at what does not qualify.
You made a bad financial choice. You spent all your money on a new car or lost it in Vegas. Poor financial decisions don’t qualify as a hardship for a short sale.
You want to move. You found another house you like better or you’re not a fan of the neighbor’s 2AM garage band jam session. Sorry, you’ll have to get some ear plugs and suck it up.
You’re having a baby. Congrats on the new bundle of joy, but feeling like you need a bigger nursery or can’t take on the expanse of an additional family member won’t qualify you for a short sale.
To sum it up, none of the above things fall into anything but irresponsibility or personal preference, and none of them are considered hard times when you’re trying to apply for a short sale. In order to prove you’ve fallen on hard times, things have to be a little more dire and less subjective. Here are some examples of qualifying hardships.
Your income effectively just got cut in half (or more) and you’re no longer able to make payments on your home. Divorce is an acceptable hardship when qualifying for a short sale.
Like divorce, except you just lost all your income, sans whatever you’re receiving from your unemployment benefits. Unemployment is also an example of a hard time that will qualify you for a short sale.
When you declare bankruptcy, you’ve already proven that you’ve fallen on hard times. If you’ve successfully files for bankruptcy, you can qualify for a short sale.
Illness or Accident
We’re not talking the flu. If you’ve come down with a serious medical condition or had a debilitating accident that affects your ability to earn a living, you can qualify for a short sale.
While it’s true that personal choices can lead to divorce, unemployment, bankruptcy or a serious accident, these things are generally a little more out of your hands than making a decision that you’d like to move. These situations are acceptable examples of hard times that a bank will take into consideration when you are applying to for a short sale for your home.
There is, of course, a lot more to it than that. Navigating the waters of a short sale can be tricky business, so if you’re considering a short sale in the Wilmington or Leland, NC area, make sure to call me, Nilesh Jethwa, your short sale expert, at 910-622-0319.