When your mortgage is more than what the home is currently worth, finding a way out from an underwater mortgage can be challenging. Most people probably don’t want to hassle or ramifications from a foreclosure, which can leave a sense of urgency to find a solution. Although short sales are one option that can resolve your mortgage troubles, they do come with some costs. If you are considering a short sale, be aware of a few key points to better protect yourself during the process.
Know What You’re Up Against
Remember that when you take out a mortgage you are signing two very important documents. The first is a promissory note, indicating that you agree to repay the loan. The second is a Deed of Trust, which gives the bank the right to foreclose on the home if you default on the loan. When you pursue a short sale it is important to have these two documents resolved during the process.
1. Request an approval letter for selling the home at a specific price, which will resolve the discrepancy between you promised to pay for the house and what the lender will actually receive in terms of payment from the sale of the home.
2. Request an authorization for the short sale process from your lender, which will provide proof of their approval to halt a foreclosure proceeding while you sell the home in a short sale.
Obtaining these documents from your lender can ensure that your home stays out of foreclosure while you are working to the sell the home. It creates a sense of mutual agreement that the lender will not pursue foreclosure as long as you are working towards resolving your mortgage debts.