3 Must Have Qualifications for a Short-Sale Homeowner
While the misconceptions of what qualifies a seller for a short sale are many, the reality is actually very simple. Following is an explanation of the three major items that most lenders are looking for to see if you will qualify.
1. FINANCIAL HARDSHIP
First and foremost a lender will want to see that you have a ‘financial hardship’. A financial hardship is a verifiable issue that has or will cause you to miss payments or have financial difficulties.
Financial hardships can be issues such as:
• Mortgage Payment Adjustment
• Job Loss
• Too Much Debt
• Business Failure
A simple definition for ‘financial hardship’ is: A material change in-between the day the mortgage was signed and today that has affected your ability to pay.
2. MONTHLY SHORTFALL
Almost every lender will want to see that you cannot afford to pay your current
mortgage. The way that this is demonstrated is on a financial worksheet that your
agent will provide. This is essentially a monthly profit and loss statement. While
this may sound difficult in reality determining whether you have monthly shortfall
or not is actually relatively easy.
While a short sale is an involved process, this is an excellent place to begin.
Total Monthly Income – Total Monthly Expense = Monthly Shortfall
In order to qualify for a short sale, you must not have the means to pay down
your mortgage. This means that the mortgage company wants to see that you owe
more than you have in cash (known as being insolvent).
You do not however have to be completely broke ― this is a common misconception,
the lender will want to see that over time you will not be able to pay your mortgage
obligation. Having money in the bank for living expenses is common and will not
In order to go through these issues it is recommended that you sit down with your
agent and examine each one in detail. While a short sale may seem like a difficult
process the right agent can make it a relatively simple one.
Take action and make an appointment with us today and get yourself startedon the
path to financial recovery.
A mortgage modification involves the reduction of one of the following:
the interest rate on the loan, the principal balance of the loan the term of the loan or
all or any of the above. This typically results in a lower payment to the
homeowner and a more affordable mortgage.
Laura Coffey, ABR, QSC, Keller Williams VIP Properties
26650 The Old Rd, Suite 360, Santa Clarita, CA 91381
(661) 857-0620 | firstname.lastname@example.org
©2009 Distressed Property Institute, LLC, All Rights Reserved
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