There are so many fear gripping the minds of homeowners, regarding short sales. Most of those fears come from a misunderstanding of how a short sale works. Consider the following two scenario, if you are thinking of short selling your home.
Scenario # 1 – If you have been current on your mortgage payment for a 12 month period; and your home has zero or negative equity; and you can prove a financial hardship.
Then, you qualify for a short sale with the ability purchase another home of equal or lesser value. Yes! It’s true. Being current on your payment keeps your credit score strong and will allow you get a FHA loan to purchase another home. This is great news!
The key is proving financial hardship. Lenders look for three items when considering short sale. First, a “verifiable hardship,” such as a job loss, pay cut, job transfer, divorce or serious illness. Second, a monthly cash-flow shortfall or pending shortfall and insolvency. And third, a lack of liquid assets that would allow you to pay down your mortgage.
Scenario # 2 – If you have been late with your mortgage payments; or have missed payments; or have been given a notice of default; and your home has zero or negative equity, and you can prove a financial hardship.
Then, you can stop foreclosure and qualify for a short sale. However, if you missed payments and/or have a notice of default, then your credit score will be slightly effected. The good news is that after at least 18 months to 24 months you can restore your credit score. Under some circumstances you could shorten that time with credit counseling. However, homeowners who undergo a foreclosure take a severe hit to their credit scores and are ineligible for a Fannie Mae-backed mortgage for five years.
The hinge between the two scenarios is either your current on mortgage payments or delinquent. Either way a short sale is possible. Call now and get the help you need! Also, find out about how a short will cost you “NO” out-of-pocket expenses. 916-832-8973