Thursday, January 01, 2009

Short Sale vs. Foreclosure

If you are behind on your mortgage payments, you may be able to work out a new payment plan with your mortgage company. If you no longer have income to support the mortgage payment, you may be getting close to foreclosure... There are other options to consider. A short sale is when the lender agrees to accept less than the amount owed on the loan as payoff for the loan. This will still hurt your credit but not nearly as severely as a foreclosure.

Each short sale is reviewed individually. The amount a bank is willing to accept is based on many factors, including the appraised value of the home, real estate conditions in the area, the amount of the loan, and the homeowners current financial situation.

Once an offer is submitted, along with several other documents, it can take as long as 60 days for approval. With the signed purchase contract, the lender will require a hardship letter from the homeowner, bank statements or check stubs to document income, and a preliminary HUD-1 (settlement statement showing net amount to the lender). Each lender is different so other information may be required.

After receiving the completed package, the lender will order an appraisal. That will be reviewed within a couple of weeks along with the offer. At this point, a counter offer may be made by the lender. Other terms may be negotiated with the homeowner at this time. Once an agreement has been made, including additional lienholders, the lender and/or its investors/insurers will give a decision within a week.

This process can be slow but may be well worth it to avoid foreclosure. Call if you have any questions - Jerri 706-296-4395

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