How to qualify for a Short Sale

The main reason to consider a short sale is financial hardship. Banks and lenders will not approve a short sale for just anyone. Hardship occurs when something happens that makes it impossible to afford your mortgage payments.

To qualify for a short sale, you need to have some sort of hardship and be taking a loss every month. The bank will be asking for information like your bank statements and tax returns to make sure that you do not make a million dollars a year and can afford to make the loss. Missing a mortgage payment is not required, but it’s a strong start to qualifying you.

Hardships include:

  • Death or illness of principal principle borrower or co-borrower
  • Death or long-term illness or disability of a borrower, co-borrower, or dependent family member
  • Marital difficulties, separation, or divorce of a borrower or co-borrower
  • Reduction of income
  • Unemployment
  • Excessive obligations
  • Job relocation/transfer (including a Permanent Change of Station/PCS order), greater than 50 miles one-way from the borrower’s current primary residence.
  • Property problem (roof leaks, construction litigation, etc.)
  • Incarceration
  • Inability to rent the property
  • Military service
  • Casualty loss (such as a hurricane, natural disaster, act of God, etc.)
  • Energy-environmental costs
  • Servicing problems
  • Payment adjustment (ARM Adjusting)
  • Payment dispute
  • Transfer of ownership pending
  • Fraud
  • Abandonment of property (due to condition of property, etc.)
  • Bankruptcy

If I don’t qualify, what do I need to do next?

To attempt a short sale of your property, you must first request permission from your loan provider. Foreclosure is not an attractive option for most lenders because it’s lengthy and costly, and they will often approve a short sale to avoid it. You will probably have to prove that you are in financial straits (via a job loss, medical bills, etc.) and provide bank statements, tax returns, and/or pay stubs as evidence. You will also need a short sale hardship letter.

What is a Short Sale hardship letter?

A short sale hardship letter is a letter you write to your lender explaining why you need a short sale. You can find plenty of examples online to get you started. Financial hardships are the most common and must be proved in order to qualify.

What next?

Call us today at (703) 782-8100 or fill out our Contact form for a FREE, no commitment, evaluation on whether you may qualify for a Short Sale.

%d bloggers like this: