A Guide to the Short Sale: How to Get Out of Foreclosure

For many years, short sales have been used by home sellers that have a mortgage loan that is worth more than their residence is worth. Also, struggling borrowers can use the short sale option in order to avoid having their residence foreclosed on. While a short sale can be very helpful, the process of obtaining one is often stressful and time-consuming. If you fail to take your time during the short sale process, you may have a variety of harsh consequences to deal with. Here are some tips on how to get through the short sale process easily.

Work With a Real Estate Agent Who Has Short Sale Experience

Unless you have previous experience with short sales, you will need to reach out for some professional guidance. Finding a real estate agent in your area who has helped other homeowners with their short sale is important. The first thing a real estate agent can help you with is convincing your mortgage lender to let your existing home sell for less than it is worth. Generally, writing a convincing hardship letter is needed to convince a mortgage lender that a short sale is a good idea. A short sale can take a couple of months to close, which is why finding a real estate agent who can stay on top of this process is important.

Know the Potential Consequences of a Short Sale

Most sellers who are underwater with their mortgage are so anxious to get a short sale to go through that they forget about the consequences they will face in the coming years and months. Once a short sale is complete, you will start to receive collection letters that will want you to pay the balance left over after the sale of a home. While laws regarding short sales are different in every state, many states will allow a lender to go after the remaining balance once a short sale is complete. This is why you need to find out whether or not your lender is waiving the deficiency or if the balance on the mortgage loan will still be owed. If you are attempting to avoid a deficiency judgement, be sure to research the Home Affordable Foreclosure Alternatives program.

You May Be Able to Negotiate Your Deficiency Payment

While it may be difficult for you to get a mortgage lender to wave the balance of your loan once a short sale has gone through, you can negotiate. In some cases, a lender may ask you to provide a promissory note that will obligate you to pay a portion of the deficiency. Getting a lawyer to help you negotiate the amount of money you have to pay after a short sale is a good idea. They will usually be able to work on your behalf to get this payment lowered significantly.

One of the easiest solutions to your underwater mortgage is selling your residence for cash.