How do you begin the process of a short sale? By asking and answering a few critical questions. Here are the first things you need to figure out:
What’s Your Ideal (or Acceptable) Outcome?
If you don’t know what you actually want to accomplish with your short sale, it’s unlikely you will achieve it. So, you need to start with the end goal in mind. Here are some questions that can help you clarify your objectives:
· Are you on the road to foreclosure with no way out but selling short?
· Do you think you won’t qualify for loan modification, or have you actually applied to make sure?
· Do you want to preserve your credit rating as much as possible?
· Are you trying to move because you lost your job and the only opportunity for a decent paying career is in another city?
· Would you really prefer to stay in the house if that’s an option?
· Are you and your spouse (if any) on the same page with the decision to short sell?
· Do you want to maximize your relocation assistance payment?
· Are you willing to accept some financial responsibility for paying back the difference between your outstanding loan balance and the short sale price, or do you need the debt to be forgiven?
Who Owns Your Home?
Determine who your lender is and figure out who “owns” your mortgage. You may not realize that these can be two separate entities. For example, Wells Fargo might be your loan servicer (the company you make house payments to). But Fannie Mae might actually be considered the investor who “owns” your mortgage. In addition, your original lender may have sold your loan to another company recently. You should have received notification of this before it happened, but it always pays to double-check. All parties involved have to agree to a short sale before it can go forward.
What’s Your Financial Picture?
As you explore your options for escaping from an underwater mortgage you can no longer afford, you need to know every detail of your finances. This includes all your outstanding debts (including old debts that are still on your credit record), any unpaid taxes, car loans, student loans, etc. It also means accounting for all money coming in and all money going out. Getting your budget nailed down makes it easier to write your “hardship letter” explaining why you can no longer pay for your home.
Your next step before contacting your bank to start the approval process is to find a qualified short sales specialist in your local area. Don’t try to go it alone – that just makes everything take longer!