Things to know about the
Short Sale Process
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You'll hear the myth over and
over: "Short sales protect credit." That's only partially true. Your credit
will tank if you fall behind on your payments. Experts say agents who repeat
that mantra without clarification do so out of ignorance or self interest, take
your pick.
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There is one exception. If you
have no 60-day-plus late pays on your credit report, Fannie Mae may still offer
you a loan to buy another home. However, most people who sell on a short sale
are in default past 60 days, so this exception does not apply to
them.
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As Short Sales become more and
more common, and the lenders streamline the Short Sale process, the best homes
will be sold off as Short Sales prior to foreclosure.
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What do I
need to start the Short Sale Process"
Below are the items will will
eventially need.
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Hardship Letter. A basic synopsis
of the reason to be considered.
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Third party authorization to talk
with your lenders
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Financial Analysis Sheet. (We can
provide)
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Last 2 years tax
returns
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Last 2 pay
stubs
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Current Market Analysis (We
Provide)
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Listing Agreement. From your
agent or one of our agents can assist you.
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Market Trends and Absorption
Rates for the area. (we can provide)
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Cooperation in allowing potential
buyers view the property.
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Benefits vs.
Drawbacks
Benefits
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Retain some dignity in knowing
that you sold your home.
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You won't suffer the social
stigma of the "F" word: foreclosure.
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No mortgage payments to make,
unless you choose to make them.
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You will be eligible, under
Fannie Mae guidelines, to buy another home in 2 years instead of 5 to 7
years.
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If your credit report does not
reflect a 60-day+ late pay, under Fannie Mae guidelines, you will be eligible
to buy another home immediately. |
Drawbacks
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You may experience some of the
same drawbacks as a foreclosure, but they might seem less
intense.
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Waiting for the bank to respond
to an offer is frustrating.
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The bank will want to examine
personal records such as tax returns, bank accounts, assets and liabilities, in
addition to asking for a hardship letter from you.
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Accommodating buyers will mean
keeping your home in spotless condition for weeks or months until an offer is
received and putting up with traffic through your home.
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There is no assurance the bank
will accept a short sale offer. |
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The derogatory credit will remain
on your credit report for 7 years. |
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For many sellers, though, the
chance to buy another home in two years is the real motivation to do a short
sale. Good credit behavior can supplant bad credit after two years, even though
the derogatory will remain. |
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