Many homeowners that are considering a short sale often wonder if they have to be late on their mortgage in order for their lender to consider them a candidate for a short sale. I understand – many people have good credit scores, and don’t wish to have them plummet if its possible to preserve that score. The simple answer is no, you don’t necessarily have to stop paying your mortgage for your lender to consider you a short sale candidate. There have been some cases where a homeowner will complete a short sale without ever having missed a payment because their hardship wasn’t completely due to financial issues. While many times short sales occur due to financial issues, there are other reasons for a legitimate “hardship” such as divorce, job transfer, family illness, etc.
One of the main things that your lender will want to see, however, when looking at your short sale package is your monthly net income and whether your expenses exceed that stated income. While you may not think that your monthly bills exceed your net income, it’s important to take everything into consideration, such as gas, insurance, medical bills, food, any extracurricular activities; all of these things add up and can create financial strain on a household. Obviously if you are moving out of the area because of a job transfer or an ill family member or a similar scenario, this will easily send your net income out of whack were you to have to pay two sets of bills for two households. If all of these things combined exceed your monthly net income, your lender will more than likely consider doing a short sale on your home.
Still, some investors do require that you be late on your payments in order to qualify for a short sale, or if you’re not late, you need to be able to prove that you becoming late on your mortgage in the near future is unavoidable. If you are curious to see if your investor falls into this category, contact me and I can do my best to find out if your lender or investor falls into this category. Once I had a short sale Seller who had an 800 credit score and did not want to go late on her mortgage if at all possible. She had moved out of the state, and lost the tenant who was previously in her home. Chase Bank was her lender. We got all the way through the short sale process, and our negotiator at the bank said to us “Everything looks great, we are in line to approve the sale except for one thing – she doesn’t have a “hardship” because she’s still making her payments”. Nevermind that she only had $300 in her bank account at the time – I guess that didn’t matter to them. She at that point missed one payment, which did put a small ding in her credit, and we got an approval letter from Chase to complete the short sale.
There are ways to complete a short sale without every being late on your mortgage, so if this is a concern of yours, it’s best to consult with a Tampa short sale Realtor that can supply you with the information that you need.