Ensuring a successful short sale – Valuable tips to follow to complete the process

With the present housing market conditions and the unemployment rate in the US, an increasingly large number of people are defaulting on their mortgages. As the market is declining in the nation, short sales are becoming the hottest topic for most struggling homeowners. Short sales are done by those homeowners who have overfinanced on their mortgage and are having a bad term on their loan that is keeping them from making timely payments on the loan. While it is certainly disconcerting to receive collection letters from the collection agencies and be threatened for an imminent foreclosure, those who are falling back on their monthly payments can rather choose some option that can help them get rid of the debt issues. Short sale is a viable option that the homeowners may choose to resolve their secured loan debt issues and deal with their home that is unaffordable according to their budget. Have a look at some steps to ensure a successful short sale.

1. Stay equipped with pieces of evidence: Make a list of the necessary repairs accompanied by the contractor bids that have been made on those repairs. While you prepare the report, make sure you present the highest quotes in your report. The second information that you need is a list of the homes that are recently sold homes that can be compared to the home that you're going to purchase.

2. Get the approval of your mortgage company: If possible, you must always get the approval of the mortgage company before you list the house for less an amount that you owe on your mortgage. Not all lenders may agree to do this but they often need an offer before approving your short sale process.

3.Stay prepared to contribute to the loss of the mortgage lender: You must stay financially prepared to contribute towards the losses of the mortgage company. As you're not being able to repay the loan, it is most likely that the mortgage lender will suffer a loss and this will require extensive documentation of your personal financial documents like income proof, employment verification and other income from all other sources. You must also list assets including the investments, bank accounts and others.

4.Offers and approvals can alter later: Although you may have submitted your short sale application to your mortgage loan lender, the buyers may still request an inspection of the home so that they can come to know whether the house needs any repairs. They may request that the repairs are all done at the seller's expense and the home seller credits the buyers with specific amount of cash for the repair at closing.

5.The loss amounts may also change: Your mortgage lender may distribute the payments for hazard insurance, mortgage insurance premiums and property taxes in between the time he short sale offer is received, and between approving and closing.

While a foreclosure may trash your credit score, it is always better to go for a short sale as it is just like settling your credit card debt where you pay an amount that is less than what you owe the lender. Make sure you repay your mortgage loans on time so that you can easily repay the loan without going through the hassles of a short sale or a foreclosure.

Contributed by:

Gloria Agnello

gloria.agnello@gmail.com