How Far Can I be Behind on My Mortgage with a Short Sale?

Since 2008, many people have been falling behind on their mortgages and wonder about the possibility of being able to short sale their home before foreclosure processes set into motion. A short sale is where a homeowner who has fallen behind on their mortgage on their home that has lost value and cannot be sold for the mortgage owed works out a deal with the lender to sell the home for whatever the market will bear. The lender then keeps the proceeds and discharges the remaining debt.  When you're behind on your mortgage and considering a short sale before foreclosure processes begin, time is of the essence.

It does not matter how far behind on your mortgage you are.

In order to short sale, what you need to do is prove a "hardship" of why you're unable to continue making your mortgage payments. A hardship situation is one that results from extenuating circumstances forcing the buyer into a position where they can no longer make their mortgage payments. Some common examples include:

  • -decrease in the value of the home
  • -unemployment or loss of primary income
  • -inability to work due to health crisis
  • -mounting medical expenses
  • -employment relocation
  • -failed business
  • -bankruptcy
  • -death of spouse
  • -divorce or separation

In addition to proving hardship, the lender will need a specific set of supporting financial documents to consider a short sale. This is something a short sale specialist can help you with.

Short sales and foreclosures negatively affect your credit rating. However, at least short sale individuals avoid the "debt discharged due to foreclosure" on their credit reports. Having a foreclosure on your credit report can reduce your credit score by up to 250 points. Additionally, you won't be able to qualify for a mortgage at a reasonable rate for several years.

Short sale individuals receive a "pre foreclosure in redemption" status on their credit reports. This is better than the aforementioned because you only reduce your credit score by 100 points or less. Then, after the sale, the mortgage may show up as "discharged".  Additionally, those who perform a successful short sale, may be able to qualify for a mortgage in as little as 18 months.

Don't be one of the many people who simply give up and let foreclosure happen because you don't realize your short sale options. There are no out of pocket fees associated with short sales. The borrower's current lender usually pays the real estate agent for the real estate services provided.

Still have questions? Contact me today! We can find out if you qualify for a short sale or get your San Diego home sold ASAP!