Salt Lake County Short Sales Explore Short Sales in Salt Lake County, Utah!
Short Sales in Salt Lake County, Utah
These are tough times for property owners. Many are struggling and cannot find the money to pay their mortgage. To save their credit and prevent foreclosure many people opt to do a short sale. A short sale is the disposing of real estate for an amount lower than what is owed on the property.
However if the lien holder agrees to the short sale and releases the homeowner from any further obligation the homeowner doesn’t have to repay any unpaid balance. A short sale frees the homeowner of the burden of a mortgage they cannot afford to pay and allows them to move forward with their life.
Almost 2.25 million properties have been short sold since the mortgage crisis began a few years ago in the United States. For homeowners it is preferred over foreclosure because it can save their credit standing and eliminate the additional fees they might have had to pay.
The process of short selling is relatively simple. The first step is the homeowner has to prove to the lender that their financial situation is so bad they cannot pay their loan or the deficiency. The deficiency is the difference between what the seller can get for the house via a short sale and what is owed on the property.
Negotiating An Agreement
All of the creditors that have a lien against the property must agree to the short sale. That includes the holder of the primary mortgages, any second mortgages, homeowners associations and financial institutions that have extended equity lines of credit.
The primary mortgage holder must have the property independently evaluated to determine its current market value. They lender must also get a broker’s opinion of value. They then prepare a short sale package. This includes a hardship letter explaining why the borrower cannot continue to pay the mortgage.
Many creditors agree to short sales even if the borrower is not yet in default because of missed payments. The financial crisis, which began in 2008, has caused so many bankruptcies financial institutions and other lenders have streamlined the short sale process. Still, the process can take several months to complete as the parties involved attempt to get all the approvals needed to complete the process.
Even the mortgage insurance company has to approve. Sometimes secondary lien holders can slow down or completely derail the short sale by refusing to agree to negotiate for a reduced repayment amount.
A short sale can benefit both the distressed homeowner and the lender. The lender gets to recoup most of the money they invested in the property. The homeowner gets out from under the crushing weight of a mortgage they cannot pay. In addition, the damage to their credit is not as bad as if the property went into foreclosure.
The short sales saves both parties from having to pay lawyers and send time in court over the money. A pivotal part of the process is the homeowner’s ability to prove they have a legitimate hardship.