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Team Aldrich
(877) 644-SELL (7355)
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Questions And Answers
What is a short sale?
Who is a secured creditor?
Do I qualify for a short sale?
How much will a short sale cost me?
How do I start the short sale process?
What are my other options?
What are the most common reasons a home goes into default?
Why would a lender agree to do a short sale?
Will my lender do a short sale if I haven't missed a payment?
My home is a fixer-upper, will a short sale work for me?
I have more than one mortgage, can I still do a short sale?
What will a short sale do to my credit?
Can I just deed my property to someone else?
What is a short sale?
A short sale is the purchase of a property for less than what is owed on it by obtaining permission from all the secured creditors to do so.
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Who is a secured creditor?
A secured creditor is any institution, business or individual secured through a trust deed or lien on the property. Creditors secured by a property can include banks, individuals, municipalities, homeowner associations, persons claiming child support, etc.
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Do I qualify for a short sale?
Maybe. Creditors will only discount their loan when it makes good, financial sense to do so. When faced with the prospect of foreclosing on a property that has little equity, the lender's loss mitigation departments will consider individual hardships that are keeping you from making your mortgage payments. These hardships include divorce or the split of domestic partners, job loss or relocation, serious illness or injury within your family or an increase in living expenses or mortgage payments. To find out if you qualify, click here.
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How much will a short sale cost me?
If your lender approves of your short sale, all title and escrow fees, commissions and even approved repairs will be paid by the lender. You should not have any expenses in the sale.
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How do I start the short sale process?
There is no charge and no obligation, simply click here to fill out the online short sale pre-qualification form, or you can contact us toll free at 877-644- SELL (7355).
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What are my other options?
- Market your Home Traditionally
We will first determine if your home has equity through a comprehensive market analysis. If it does, we can market your home traditionally to get you the maximum equity.
- Refinance and Keep Your Home
If you have equity, you may want to consider contacting a local lender who specializes in these types of loans. We can refer you to the local experts.
- Ask the Bank to Modify Your Loan
If you experienced a temporary job loss or illness that caused you to fall behind on your mortgage, the bank may consider letting you modify your loan and resume payments. The is referred to as Forbearance.
- Foreclosure
If you continue to miss your payments, the bank will have no choice byt to foreclose on your property. Many people bury their heads in the sand and hope the bank will go away.THEY WON'T! Foreclosure is serious and will be damaging to your credit for years to come.
Fill out the pre-qualification form and we'll get started exploring your options.
Remember in a short sale there is typically no cost to the seller!
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What are the most common reasons a home goes into default?
- Financial Regression
Often when responsible, intelligent, hard working individuals find themselves in foreclosure, it is a result of unemployment, demotion or health care issues. People in this category often resort to tapping equity in order to make ends meet. If matters do not get quickly resolved, the house becomes over mortgaged; they default and end up in bankruptcy or foreclosure.
- Keeping Up With the Jones'
More and more people live at or beyond their means. For these people, as soon as there is any income disruption or extra expense, mortgage payments become difficult to pay.
- Personal Problems
Divorce or separation may cause the duplication of household expenses leaving insufficient income to meet the mortgage commitment. Loss of income due to illness or injury and company relocation all may lead to the inability to pay the mortgage payment.
- Death or Incarceration
Obviously, either of these instances cause complete disruption of the family and can often times lead to financial difficulty for the homeowners.
- Liberal Lending Practices
In recent years, we have witnessed a liberalization of sub-prime lending practices. Mortgage brokers encourage homebuyers to commit to the maximum mortgage payment level that they can possibly sustain. Usually the reasoning is that the property will go up in value and the homeowner will be able to refinance. It is not uncommon to find 100% financed houses in which dual income homeowners pay up to 50% of their combined income in mortgage payments. Needless to say, for these people just about any financial challenge will result in default and possibly foreclosure.
- Mortgage Lending Fraud
This is often the result of mortgage brokers specialized in sub-prime lending. These unscrupulous loan brokers embellish the financial capacity of unqualified homebuyers. The homebuyers end up with high interest loans and usually higher payments than expected. The result of this is that the new homeowner defaults soon after buying the house.
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Why would a lender agree to do a short sale?
There are several reasons why a mortgage lender would approve a short sale. Some examples are:
1. Legal Concerns - Mortgage lenders have come under increasing legal pressure to work with homeowners to resolve situations where borrowers are unable to make their mortgage payments, particularly when the borrower makes an effort to arrive at a compromise solution.
2. Pressure from Investors - If mortgages perform poorly after they are sold on the secondary market, it could impact the lender's ability to sell their loans in the future. An approved short sale may return a greater amount of the investor's principle in a timely manner.
3. Avoids Management Expenses - After foreclosure, banks must bear the expense to manage the property until it is resold. As you could imagine, it is expensive to manage homes spread throughout the United States. A successful short sale eliminates the costs of repairs, utilities and administration for the lender.
4. Pride of Ownership - Many times, short sales will sell for more money than a foreclosure. A willing homeowner keeping the home neat and tidy will be more inviting for potential buyers than a vacant property.
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Will my lender do a short sale if I haven't missed a payment?
Maybe, if the right hardship exists and a foreclosure appears inevitable, the lender's loss mitigation department will review and possibly approve the file.
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My home is a fixer-upper, will a short sale work for me?
Yes! A home that needs repairs is an added reason for the lender to want to dispose of the property prior to foreclosue.
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I have more than one mortgage, can I still do a short sale?
Yes, often times the primary and secondary lenders will both take a reduced payoff to avoid foreclosure.
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What will a short sale do to my credit?
While a short sale and payment delinquencies will negatively affect your credit, a foreclosure is much more devastating.
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Can I just deed my property to someone else?
No! Simply deeding the property out of your name does nothing to lessen your responsibility to the lender. Once you have deeded the property, you lose all control of your home. If someone approaches you with this scheme, do not sign anything until you have consulted your attorney.
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