About Short Sales

There may be times because of a person’s career or for a personal reason that the home in which they are living and hoped to for many years needs to be sold. However, with the current economic climate selling a home whether in Washington or any other US city has become more difficult. This is one of the reasons short sales of Washington homes or homes elsewhere are becoming more common. So what is a short sale and how does one qualify for them?

Short sales on homes are where a property can be sold for less than the actual amount that is outstanding on the mortgage and this amount is then cleared fully by the lender. A great number of lenders are willing to allow a short sale on a property rather than carry out foreclosure proceedings. This is because it costs them a lot less because once a property is foreclosed the lender takes responsibility for it and has to arrange its sale.

However when it comes to selling your Washington home using this method you will need to be able to meet certain criteria’s and below we look at what some of these are.

1. Before agreement can be made of a short sale the owner of the property needs to show the lender that they are having financial problems. It is important therefore that as soon as you know you are having financial difficulties you contact the lenders customer service or collection department. When talking or writing to them keep a record of everything even though the lender will be keeping their own.

When it comes to showing them that you are having financial difficulties there is certain documentation that you need to provide them with which shows what assets you have. They will want copies of your pay checks, bank statements, tax returns along with any stocks or bonds you have. Not only can they see what your income is like but will be able find a way to assist you that may mean you don’t need to sell your home at all.

2. Should you complete a short sale on your Washington home then upon completion the lender will require further documentation to back up your request. They will want a copy of the comparative market analysis report carried out by the real estate agent who sold the property for you. Also they will require a copy of the sales agreement as well as details of the amount you made or loss when you sold your Washington home.

Be aware however that sometimes the lender may not be the only person who can agree to a short sale on your home. If you have mortgage insurance then the investor who has provided this may also be required to give their agreement to a short sale on your Washington home.

Americans are hearing and seeing TV stories regarding the national real estate market. Such a national market does not exist.

There are 124,377,000 homes in the United States according to the most current American Housing Survey. These homes are within:

- 50 states, with
- More than 30,000 incorporated cities, and with
- An innumerable number of neighborhoods

Our media clumps the 124 million homes in a huge group and attempts to analyze their data. It doesn’t matter one iota how the media presents this because houses in Los Angeles can’t be compared to houses in Pittsburgh.

To get real estate analysis that matters, look local instead. And I don’t mean stats from your state — I mean stats from your neighborhood. It’s the only way to know what’s driving home prices on your street.

The media doesn’t report small markets. Consult your neighborhood real estate agent or someone with access to the data. The professional can provide a better picture of what is driving your neighborhood market.

By talking to “in the market” professionals that know your backyard, you’ll get a much clearer picture of your local market — good or bad — than the national media could ever provide.

Real estate is a local market so your real estate data should be local, too.

A home buyer should know that there are 2 stages to mortgage loan approval. We have heard of preapproval. When the buyer submits the loan application to his loan officer for preapproval, Stage 1 begins.

When pre-approval is requested, it will be a preliminary home mortgage approval indicating that the mortgage will likely be approved for a certain down payment and purchase price.

This preliminary approval will not matter once the application goes to review for the actual mortgage loan. Stage 1 ends when the “underwriter”, not the loan officer becomes involved.

Stage 2 of the process occurs when a mortgage underwriter is reviewing credit, income, assets, job history and probable other things. It is the job of the underwriter to insure that the buyer can meet the lending institution’s criteria for loans.

This procedure should be a formality if the Stage 1 loan officer did an appropriate job. Usually this stage moves along as anticipated. However, sometimes the buyer changes his loan “risk” without intending to do this, but affecting the mortgage approval. The buyer doesn’t mean to decrease his loan probability, it “happens.”

During the mortgage approval process, the buyer must not do anything that will increase his loan risk during the time between Stages 1 &2. Risk needs to remain consistent. The following are 6 things of the “Honey Don’t” list for this interim period:

1. Don’t quit your job, change careers, or accept a “commission only” position. 2. Don ‘t miss a payment to a creditor 3. Don ‘t buy a new car or increase any vehicle payments 4. Don’t accept cash gifts without talking to your loan officer(there are gift rules) 5. Don ‘t open a new credit card no matter how great a deal 6. Don’t transfer large amounts of cash in/out of bank accounts

There’s other items, too, but this a good start. Now, avoiding these mistakes may not be practical for everyone. Therefore, if you know you’re going to violate a “rule”, check with your loan officer first. There are a lot of “gotchas” in mortgage lending and it helps to have professional guidance for your individual questions.