What is a short sale on a mortgage?

What is a short sale on a mortgage?

A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage servicer agrees to a short sale, you can sell your home and pay off a portion of your mortgage balance with the proceeds.

How to get a mortgage for a short sale?

Get pre-approved for a mortgage: Buying a short sale property begins the same way as buying any other home: get pre-approved by a lender. They will tell you how much you can afford, how much cash you need, and what your monthly costs will be.

How does a short sale work in real estate?

A short sale is a real estate sale in which the lender who owns the mortgage agrees to let the borrower sell the home for less than what he or she owes on the loan. While most lenders are reluctant to agree to short sales because it will mean they have to take a loss, there are some instances where a lender will allow it.

Can a reverse mortgage be used for a short sale?

If the homeowners sell the home, for instance, the reverse mortgage must be paid off. Unfortunately, sometimes reverse mortgage borrowers are unable to sell their home for a large enough amount to cover the reverse mortgage. In these cases, a short sale may be allowed.

Can a short sale be used to avoid foreclosure?

Short sales are an option for homeowners who are underwater on their mortgage to sell their property, and to avoid going into foreclosure. For many distressed homeowners, short sales are an alternative to foreclosure. Here are the steps sellers need to take in order to sell their properties in short sales:

How do you get a mortgage after a short sale?

There are exceptions to the normal waiting periods for a conventional loan. To qualify for these exceptions, you need a minimum down payment of 10 percent, and written proof that the short sale was the result of extenuating circumstances. Verify your eligibility for a new mortgage.

How do you buy a short sale property?

A typical short sale involves a series of steps, generally in this order, according to Bobbi Dempsey , co-author of “The Complete Idiot’s Guide to Buying Foreclosures.” Identify potential short sales. View the property. Do your research. Find all liens and mortgages. Figure out the financing. Contact the lender.

Why to buy a short sale?

There’s only one reason to buy a short sale home — to get a great deal. “Short sale” simply means the sales price is less than the balance of mortgage(s) owed against it. Short sales can take longer to close because lenders are not in the business of selling houses.

What is the definition of a mortgage short sale?

mortgage short sale. A process where borrowers sell their properties at a price lower than than their mortgage balance upon the approval of their lender. This is done in order to relinquish difficult mortgage deal that is causing them financial distress as it allows them to pay their lender and avoid foreclosure on their mortgage.