Do I qualify for a Short Sale?

While the misconceptions of what qualifies a seller for a short sale are many, the reality is actually very simple. There are three major items that most lenders are looking for to see if you will qualify:

• Financial Hardship

First and foremost a lender will want to see that you have a “financial hardship”. A financial hardship is a verifiable issue that has or will cause you to miss payments or have financial difficulties.

Financial hardships can be issues such as:

1. Mortgage Payment Adjustment

2. Job Loss

3. Too Much Debt

4. Business Failure

A simple definition for “financial hardship” is:

A material change in-between the day the mortgage was signed and today which has affected your ability to pay.

• Monthly Shortfall

Every lender will want to see that you cannot afford to pay you current mortgage. The way that this is demonstrated is on a financial worksheet that we provide. This is essentially a monthly profit and loss statement. While this may sound difficult the forms are quite simple and our staff is available to assist when it is needed.

The equation is:

Total Monthly Net Income – Total Monthly Expense = Monthly Shortfall

If you do not have a monthly shortfall but will have one soon due to a payment increase or pending layoff, ect. then you may still qualify for a short sale as long as this issue is verifiable.

• Insolvency

In order to qualify for a short sale, you must not have the means to pay down your mortgage. This means that the mortgage company wants to see that you owe more than you have in cash (known as being insolvent).

You do not however have to be completely broke – this is a common misconception, the lender will want to see that over time you will not be able to pay your mortgage obligation. Having money in the bank for living expenses is common and will not disqualify you. Other assets are allowed as well.

Action Sales Group
13005 W. Bluemound Rd. • Brookfield, WI 53005
Phone: (262)439-7016 • Fax: (262)439-7011