Common Questions About a Short Sale
Are you unable to pay your mortgage payments and at risk of losing your home?
If so, you undoubtedly have many questions. You are not alone. The fact is, millions of homeowners in the same challenging situation seem to have more questions than answers. The information provided will most likely help you better understand your options. Because every homeowner has their own unique situation we do encourage you to take the next step and schedule a free consultation.
Do I know if I qualify for a short sale?
There are many factors to be considered in qualifying for a short sale. To qualify for a short sale a homeowner may be facing one or all of the following situations:
1. Financial Hardship: A situation that causes you to be unable, or have trouble affording your mortgage payment.
2. Income Shortfall: You simply do not have enough money each month to pay your mortgage and other financial obligations. Lenders require proof that you cannot afford or soon will be unable to afford your mortgage payments.
3. Insolvency: Lenders require proof that you do not have significant liquid assets that would allow you to pay down your mortgage.
What is a mortgage modification?
Mortgage modification is when a lender changes (modifies) your existing loan. For example:
- Principal balance reduction
- Interest rate
- Loan terms (adjustable to a fixed rate)
A loan modification may allow a homeowner to avoid foreclosure and keep their home because of the newly modified mortgage payments.
Will my lender modify my mortgage?
Most lenders will attempt to adjust existing loans – making the homes “more affordable.” By creating lower payments and better loan terms some homeowner’s lenders may avoid the higher cost of foreclosure which could be 30-50% of the property value. Creating a solution that allows a homeowner to keep their home is a win-win situation.
How do I qualify for a mortgage modification?
You will need to provide the following information and documentation to your lender to be considered for a mortgage loan modification:
- A copy of your first mortgage statement
- A copy of your second mortgage statement or home equity line of credit
- All credit card account balances and minimum monthly payments due
- All other debts such as auto loans and student loans including monthly payments and account balances
- Most recent income tax return
- Copy of savings account statement(s) and other assets
- Copy of recent pay stub which will provide monthly gross (before tax) income or documentation of other income from other sources
- A letter detailing the circumstances that caused your inability to continue to make your monthly mortgage payment. Circumstances might be a divorce, illness, and/or job loss
How do I start the mortgage modification process?
The first place to start is with your lender. Call the customer service number listed on your statement. Be prepared to provide them with the information listed above and ask what your options are. If you happen to get a person who is unable to answer your questions ask them to speak to someone in:
- Mortgage Modification Department
- Loss Mitigation Department
Lenders have different names for these departments so be sure to ask until you reach someone who can assist you.
- Go to Making Home Affordable and complete the eligibility survey to find out if you are eligible for a mortgage modification through the government-sponsored program.
- Visit Hope Now for a Directory of lenders and servicers. You will also find an eligibility assessment tool here as well.
If I don’t qualify for a mortgage modification and I am unable to make my mortgage payment, what are my options?
The good news is, in most cases, foreclosure is not the only option. Know that you are not alone. If you are not successful in working with your lender or servicer in reducing your payments to an “affordable” monthly payment, then you definitely want to consider a short sale. A successful short sale will allow you to avoid foreclosure and sell your home for less than what is owed. To ensure a “successful short sale” you want to choose a trained and certified agent who understands the process. Request a free consultation with Kathleen Daniels and discover your options.
Is it possible to refinance my home and lower my payments?
You may be eligible for a Home Affordable Refinance if Fannie Mae or Freddie Mac owns your mortgage. A Home Affordable Refinance allows a homeowner to refinance and lower the monthly payments.
How do I qualify for a Home Affordable Refinance?
According to government resources, the qualifications for a Home Affordable Refinance are:
- Must be the owner-occupant of a one- to four-unit home
- The loan on your property is owned or securitized by Fannie Mae or Freddie Mac
- At the time of application you are: (a) current on your mortgage payments; (b) you have not been more than 30 days late on your mortgage payment in the 12 months preceding your application; or (c) you have not missed a payment if you have had your loan less than 12 months
- You believe that the amount you owe on your first mortgage is the same or slightly less than the current value of your home
- You have the income to support the new mortgage payments
- The refinance improves the long-term affordability and/or stability of your loan
Short Sale Agent
If you need help with a short sale, be sure to hire a Certified Short Sale Specialist with experience and an in-depth understanding of San Jose short sales and the short sale process. A successful short sale could depend on hiring an experienced agent with a proven track record. Contact Kathleen Daniels for help.