Mortgage terms last a long time and like anything else in life, circumstances can change over the term of your loan. In some cases, you might be missing payments or are worried that you soon might not have the ability to meet your obligation. Sometimes the value of the property is below what you owe on the loan. In situations like these, homeowners may consider a “short sale” of the property. These sales can help sellers get out from under a challenging mortgage and they can benefit homebuyers by giving them a better deal on a short sale home purchase than they might otherwise get in more traditional markets. Cliffco Mortgage Bankers wants our customers to understand short sales and all aspects of the real estate market.
Cliffco Helps Find Loans That Fit Your Needs
Cliffco helps customers find loans and homes that are right for them. We want to help you understand the mortgage process, so you can find a loan that gives you a better chance to meet your obligation. We also want to tell you about programs that may allow you to purchase a home that might be out of reach for you under other circumstances. You might even be interested in a home that happens to be a short sale home.
The Short Sale Process
A short sale is defined as a transaction that occurs when property is sold at a price lower than the seller owes on the mortgage, according to the Freddie Mac website. A mortgage lender does have to approve a short sale because they are going to end up receiving less than what they would be owed if the mortgage were to stay in place, so the lender will almost certainly investigate whether or not the buyer has the ability to pay off the mortgage.
According to the Balance, banks look at things like job loss or transfer, divorce, bankruptcy, death or medical emergencies as evidence of a hardship that might cause the lender to sign off on a short sale. The seller of the short sale home will be responsible for preparing a financial package to submit to the bank handling the short sale. This usually includes two years of tax information, a month of pay stubs, two months of bank statements, a closing statement, a financial statement and a letter authorizing any agent to speak to the bank.
The seller should also submit a list of comparable sales in the area. The short sale home buyer should also request a list of comparable sales from their real estate agent. Once the bank gets the file from the seller, they must acknowledge receipt and assign a negotiator, sometimes a second negotiator is assigned. A broker price opinion (BPO), which is similar to an appraisal is ordered and a pooling and servicing agreement which is a contract related to mortgage backed securities the bank can then issue a short sale approval letter.
Cliffco Mortgage Can Help You Buy a Short Sale Home
If you’re looking at buying a short sale home or you’re looking to get the right mortgage for the property you want to purchase, Cliffco can take you through the process and explain all of your options. To get started, contact us today.