If you have missed a payment on your home or you have a need to move out of the area, now is the time to take action. The decisions that you make in the next 30 days will have lasting effects, either positive or negative on your future financial well being.
One of the first things that you are going to need to determine is whether or not you want to stay in your home. If you are looking to stay you are going to have to determine whether some version of a loan modification is right for you.
A loan modification is where the bank agrees to change the terms of repayment to accommodate your current financial means. This may mean changing your interest rate, adding some of your past due balance to the back end of your loan or increasing the length of your loan to make a more affordable payment. In some states, it may also be accompanied by a reduction in the principal balance on your loan. As with anything, the bank has to see that you will have the capacity for repayment of this loan, and you will have to qualify.
If you believe that your financial situation is going to be ongoing and that you will not be able to afford the home even with better terms or if you are just wanting to sell, then your best option may be a short sale.
A Short Sale occurs when a bank agrees to allow you to sell your home and give them the proceeds even though the amount you give them is less than the total debt owed. That is where the term "Short Sale" comes from, because the sale amount comes up short of the amount needed to pay off the bank in full. So, you have to get the bank to approve the amount that the house is being sold for.
To get started doing a Short Sale the first thing you are going to need is an offer to buy your home. Its important to get started on marketing your home as soon as possible. Once an offer is procured, the bank will want us to make a strong case to them that you can no longer afford to stay and make payments. Many of these banks were given money by investors to fund your loans. These investors are now going to be taking a sizable loss and want some assurances that this is the best option for repayment of their capital.
To prove your ongoing hardship, the bank requires you to provide them with updated financial information that shows your current situation. Remember, that the only information that the bank has from you is what you gave them when you applied for the loan. In their mind, that reflects your situation. Many times there has been a loss of a job, illness, death, drop in value, etc. that is not reflected in your old financial information. So here is what they will want to see:
1.) Federal Tax Returns - Last 2 years (Generally only the front 2 pages)
2.) Pay stubs or equivalent documentation - last 2 pay periods
3.) Bank Statements - Last 2 months
4.) Mortgage Statement - This applies to any and all mortgages
5.) Hardship Letter - Letter of explanation to the bank as to why you got behind, why you cannot afford to make any further payments or catch up. (examples of reasons would be: adjustable rate mortgage went up, illness, death in family, divorce, lost job, ect) Also, in great detail in the letter, explain everything you know wrong with the house (roof leaks, plumbing problems, foundation, mold, carpet and paint, furnace, etc)
8.) Authorization to speak with your lender (We will provide this document)
One of the most common questions from homeowners is: How long does the process take?
The time can vary based upon many factors, such as the lender we are dealing with, whether we were supplied with a complete package of information, and the time of year.
At Coldwell Banker Apex, we have helped many homeowners through this process and are ready to have a confidential discussion with you regarding your situation. Call us today!