Montrose Colorado A View of the Mountains

Do you really want to do a short sale?

What is a short sale?  It's where you are trying to sell your home for less than the mortgage owed on the home.

Do I need to behind in my payments to do a short sale? The simple answer is NO.

How does having more than one mortgage on the home affect a short sale?  It depends, if you have 2 loans with the same mortgage company it really doesn't affect it. If you have loans with 2 different mortage companies this is where it can become complicated. The 2nd lien holder has to agree to either not receive any proceeds from a short sale or very little. Many times the 1st and 2nd lien holders can't agree and the home goes to foreclosure.

How do I start the process of doing a Short Sale?  You really should call a Realtor. Many Realtors these days have done a short sale and some have done many. First you should list the property and a fair market value based on what other similar homes in you area are selling for. Then as a seller you are going to have to gather a lot of paperwork that your realtor is going to have to send in to your lender to start the process.

As a seller your lender is going to want to see tax returns, income and expense reports, recent bank statements, pay stubs, a hardship lettter stating why you either can't make the payments or you can't sell the property for more than the amount owed. These are some of the main items you rlender is going to want from you, there could be other documentation that the want. Basically you are re-qualifiying all over again just like you did when you bought the house. If you have any cash assets your lender may try and claim those from you or at the very least deny your short sale.

Once your lender has all the paper work they need from you it can take up to 60 days in my experience for them to make a decision which although 30 days or less is becoming more of the norm these days, it really depends on the mortgage company.

       Should I let it go to foreclosure rather than short sale my home? Maybe or maybe not. Generally if you sell your home on a short sale you can buy another home after 24 months, if you let it go to forclosure you are looking at 4 to 7 years before you can buy another home. Although these are not set in stone and depends on your circumstances of why you did what you did.

    How will it affect my Credit Score? In the short term about the same Short Sale v Foreclosure.  if you are 30 days late on a payment  40 -100 points   90 days late 75 - 135 points. Foreclosure/short sale/deed in lieu  85-160 points. Bankruptcy 130-240 points.

What else should I watch for in a Short Sale? Short Sales do not necessarily release you from your obligation to pay back your mortgage company the amount you still owe them unless you specifically have an agreement with them. This is called a deficiency judgement, by the way this could also apply with a foreclosure. At this time it is not that common for a mortgage compnay to file a deficiency judgement against you, but don't bet on it not happening, definitely address this when doing a short sale.

There are companies out there that charge fees to handle a short sale for you. Personally I would steer clear of using any of them. You can easily have a Realtor do this for you with no up front fees, and if the home sells they will make a commission.

If you have any questions or you have a home in the Montrose Area that you need to sell and you are going to be in a Short Sale situation contact me  Alan Brown  970-209-8436  or e-mail me AlanBrownRealtor@gmail.com