Getting A Short Sale Approval

In today’s market there are many ways for a person to lose a home.  Many of these options will destroy credit, strip the poise of the owner, and embarrass their family.  For these owners who can no longer afford to keep mortgage payments current, THERE ARE alternatives to bankruptcy and foreclosure.  One of these “better” options is called a “Short Sale”

While a short sale in real estate is not always a pleasant transaction, it usually becomes the “best” option for one to pursue. However, there are many challenges to getting a short sale approved.  Usually having a professional with lots of experience is your best bet for getting a short sale approved.  This article was created to gauge the general likelihood of a short sale being approved.

These factors present the Greatest Challenge to a short sale to be approval:

Borrower in bankruptcy
Borrower CAN’T demonstrate a valid hardship (Being down on your luck doesn’t qualify as a hardship)
Borrower’s expenses are exaggerated
Borrower’s income largely exceeds monthly payments
Borrower’s assets exceeds liabilities
Borrower is difficult to work with and is doubtful to cooperate
Liens that require extensive legal support and negotiation

These factors can present a Challenge to a short sale approval:

A first that refinanced and a lender doesn’t want to give any funds to a second
A second that is refinanced.
The existence of demanding liens
Loans that have private mortgage insurance (PMI).  These insurers can require a significant amount of money and may inflict considerable delays

These Factors present an Optimal short sale scenario for approval:

These Factors present an Optimal short sale scenario for approval:
Borrower CAN demonstrate a valid hardship
Borrower’s expense exceed income
Borrower’s liabilities exceeds assets
Offer is at or above fair market value
Only one or two loans exists which were a purchase money loans
No PMI or lien problems
Borrower has a good attitude and will cooperate with the lender

A short sale can help to avoid foreclosure, which can involve hefty fees for the bank and poorer credit scores for the borrowers.  This information was created to provide to gauge the general likelihood for a short sale.  Each situation is unique and it is recommended that you contact a local professional to assist in seeing if a short sale is right for your circumstance.

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Buying a short sale can be very lucrative. However, the process is very challenging. It is important to know why most of these transactions fail.

This entry was posted on Tuesday, March 29th, 2011 at 12:01 pm and is filed under Short Sale. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.