Marti Steele Kilby is an experienced broker/owner who makes the charmwng and lovely San Diego, California her home and place of business. She's put together some great thoughts and informnation about the short sale. Concise, to the point, well written and important !
Is a Short Sale Right for You?
There are many factors that go into determining if a short sale is right for you. A short sale occurs when your lender agrees to; 1) allow you to sell your home for less than what is owed and 2) accept that reduced amount as pay-off on your loan, releasing you from any further obligation.
So here are some questions to consider if you are thinking about a short sale:
Are you upside down? Do you owe more than your house is worth? Despite the fact that there have been significant increases in home values throughout much of the country over the last year, most people who purchased a home between 2005 and mid 2007 have yet to regain the equity they thought they had acquired. To determine fair market value of your home, consult a Realtor. Do not rely on online value estimators as they can be terribly inaccurate.
Are you struggling to make your payments? If keeping your home is creating a financial hardship, and the market in your area is relatively soft, continuing to make payments on negative equity may not be a sound financial decision.
Have you been unable to obtain a loan modification? While most lenders are reluctant to reduce the principal amount that you owe, a loan modification is an option you should explore with your lender before considering a short sale.
Will you qualify? Increasingly, lenders are allowing short sales due to negative equity, but for the most part, borrowers must demonstrate a financial hardship and an inability to continue to make payments.
What are your housing plans for the future? If you are hoping to buy again, a short sale is far less damaging to your credit than a foreclosure. Many lenders will now approve a loan in as little as 1 – 2 years following a short sale.
There are some additional benefits to a short sale including the fact that the lender will generally pay all commissions and closing costs, and unlike a foreclosure, a short sale does not have as negative an impact on your credit score. Before considering whether a short sale is right for you, it is advisable to consult an attorney and your accountant.
For a confidential consultation, please don’t hesitate to give me a call. I have successfully closed many short sales throughout San Diego County and would be happy to answer your questions and provide references.