More often than not things happen in our lives that we can’t control. A love one may get sick, a jobs may require us to move, or we may not be able to afford our mortgage for a variety of reasons. In these unexpected times we may find ourselves in a position where we need to sell our house and we need to sell it fast. For this you may want to consider doing a short sale of your house in Baltimore.
But what if I owe more on the property than it’s currently worth?
Contrary to popular belief, house values don’t always go up. Many homeowners find themselves underwater, owing more on their home and the current value. If they were to sell their homes today they would likely have to pay tens of thousands of dollars out of their pockets to make up the difference. If you find yourself in this position there are still options.
What is a short sale?
A short sale is when the owner of a property requests that the lender takes less than what is owed on the property as full payment for the loan. The reason why a lender would accept less money than what’s owed on the mortgage is that it prevents the expense and time of going through the foreclosure process. When the lender and borrower come to terms on a short sale it is a win-win outcome for both parties. You can learn about the foreclosure process here.
How to short sale your house in Baltimore
A short sale is a multi-step process that must be followed correctly. This can take many months and you must be prepared to continue making mortgage payments throughout the process.
Step 1: Establish hardship
You need to make the case to your lender that you can no longer afford your mortgage. This could be due to a number of reason. It could be due to a job loss, the passing of an income producing family member, a need to move out of state due to a career change, or an unexpected medical procedure. Whatever the reason, it must be well documented and presented in a way that shows that your current mortgage is an unreasonable burden.
Step 2: Find a qualified offer for your Baltimore property
In order to accept a short sale the lender must see that you have a qualified buyer willing to purchase your property. To prove this you will need a ratified contract along with a strong proof of funds. As a professional Baltimore home buying company we are able to provide you a quick and qualified contract within 24 hours to get the process started immediately. This will save you months since you won’t have to go through the listing process with a Baltimore real estate agent. Months of saved time means thousands of mortgage payments that you won’t have to make, keeping that hard earned money in your pocket. Call us at (410) 779-4622 or fill out the form below and check off this step in the short sale process.
Step 3: Prepare a short sale package of documents and submit them to the lender
Every lender has their own short sale procedures. You’re required to use the correct forms, send the package to the correct department, and know how to follow up properly. This process can be difficult for a novice and is why we recommend that a professional short sale negotiator be leveraged. These professionals bring their experience of working through the process to ensure that deadlines are met and documents are completed properly. We are happy to assist in recommending professional short sale negotiators who have a high rate of successful transactions.
Step 4: Lender will conduct a short sale appraisal or BPO
To determine the current market value of your property the lender will order either a short sale appraisal or BPO. A BPO (Broker’s Price Opinion) is a valuation conducted by a local Baltimore real estate agent.
Step 5: Lender will negotiate with the buyer
Once they are familiar with the local market they will negotiate with the buyer on terms that they are willing to accept.
Step 6: Complete the closing process
Once the buyer and lender come to agreed upon terms the transaction will proceed to closing. The title of the property will be transferred out of your name and the lender will record the note as being forgiven.
Are there any downsides to a short sale?
Yes, while a short sale allows you to be forgiven of debt, it was be reported to the credit bureau. This mark will have a much lower impact on your credit score than a foreclosure, but will still be reported for up to 7 years. This isn’t the end of the world though. May loan products, like an FHA loan, allows you to qualify for a new mortgage after as little as 2 years.