Chapter 8: Qualifications for a Short Sale
Qualifications for a Short Sale:
Before you eagerly climb aboard the short sale bandwagon, consider the following to determine whether you may qualify for a short sale. If you cannot answer yes to all three requirements, you may not qualify for a short sale.
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The Home's Market Value Has Dropped: Hard comparable sales must substantiate that the home is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty. |
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The Mortgage is in or Near Default Status: It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass. |
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The Seller Has Fallen on Hard Times: The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments. |
A few examples that do NOT constitute a hardship are:
| 1. |
Bad purchase decisions. Blowing your paycheck on a home theater system with surround sound does not qualify as a hardship. |
| 2. |
Unhappy with the neighbors. Even if every home on your block has turned into pot growing houses, that will not qualify as a hardship. |
| 3. |
Buying another home. The lender will not care if you have decided the home is no longer suitable for you or your family. |
| 4. |
Pregnancy. Increasing the size of your family or starting a family is not considered a hardship. |
| 5. |
Moving into an apartment. If you decide to move out of your home, that is a lifestyle decision and not a very good reason to abandon your home. |
Examples of hardship are:
| 1. |
Unemployment |
| 2. |
Divorce |
| 3. |
Medical Emergency / sudden illness |
| 4. |
Bankruptcy |
| 5. |
Death |
Chapter 9: How to Write a Hardship Letter
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Chapters for Buyer's Guide to Short Sale |
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