The thought process about completing a short sale should begin when you know you can’t make payments on your mortgage based on your financial status. Do NOT let your payment arrangement go into default status with your lender.
Why is it important that you don’t go into default status?
A short sale can be as detrimental to your FICO score as much as going into foreclosure if you go into default status. Choosing to commit to a short sale before you miss any current or future mortgage payments can help protect your credit score from decreasing significantly. A short sale isn’t the best method if you want to save your current credit score, but it can be a good process to do less harm to it. Avoiding any risks of further damage could keep you moving forward financially.
The timeline to complete a short sale varies and can take a long period of time. To start the process, you need to:
- Assess the status of your market.
- Speak with your lender.
- Contact the appropriate specialists about the transaction (real estate consultant), legal advice (lawyer) and tax consequences (accountant).
- Submit a “Hardship Letter” to your bank explaining your unfortunate financial status.
- Prepare your financial records to provide your lender (if requested).
The lender has the right to deny your request for a short sale, especially if it sees that you have assets that could help pay the difference (“short”).
Find a Shorewest sales consultant who can help you during the short sale process here.