What is a short sale?

A short sale basically involves selling your home for less than what you owe on it, and giving the proceeds to your lender as full payment. Usually, the lender then considers your mortgage cleared and you can walk away without any obligations. Short sales usually work for people who have underwater mortgages; that is, those who owe more on their home than it is currently worth.

Is it hard to get a short sale?

Not all lenders will agree to a short sale, as it poses a direct loss on their part. But with government efforts to support foreclosure prevention methods, more and more lenders are granting short sales to help struggling borrowers. To get your short sale application approved, you need to convince your bank that it’s your best option, and that a short sale makes financial sense for both parties.

How do I get started?

The best thing to do is call up your bank and find out their short sale policies. Some banks will let you do a short sale even if you’re still current, while others require you to be at least 90 days behind. Others assess you based on your financial situation. One thing’s for sure, though: the earlier you act, the better. Most people start the short sale process when they’re already in foreclosure, and many end up losing their homes before getting a reply.

What do I need?

Short sale requirements vary from bank to bank, but the most commonly requested are financial statements, mortgage bills, tax forms, and a proof of income. You will also need to write a hardship letter explaining your situation and convincing the lender that a short sale is your most viable choice.

How do I get approved?

Needless to say, whether or not you actually get a short sale approval is all up to your lender. Make sure your documents are complete; the clearer the picture you provide of your financial situation, the easier it is for them to evaluate you. Consider working with a short sale firm such as Short Sale Safe, who will guide you through the whole process and help you increase your chances of approval.