Before it is possible to explain the reasons for a Minnesota short sale, it is important to understand exactly what a short sale is. A short sale is when a seller wants to sell their house, but there isn’t enough equity in the home to sell it and pay off the mortgage (or mortgages) in full. Basically, the homeowner owes more on the house than what its worth. In the down real estate market that we have experienced over the last few years, this scenario has happened quite a bit.
In order to sell your Minnesota home on a short sale, the bank or mortgage company has to agree to take less than what you owe them on the mortgage and release the deed to your house to the new buyer. Not such a simple process to say the least.
Now that a short sale definition has been explained it is important to understand the reasons that go along with a short sale. Unfortunately, a bank or mortgage company isn’t just going to let you out of your mortgage and house because you no longer want it or want to buy a new home. You have to show a financial hardship or in other words, that you can no longer afford to keep the house.
Here are some common financial hardships:
1. Job Loss
If you or your spouse lose your job and have less money coming in you may not be able to afford to keep your house. The bank/mortgage company may see this as a hardship and agree to settle your mortgage debt for less than what you owe on it.
If you are struck with an illness and can no longer afford to work, the bank/mortgage company may consider this a hardship and allow you to sell your home on a short sale.
If you are getting divorced and are going from two household incomes to one household income, the bank/mortgage company may consider a short sale. If neither spouse can afford the house on their own, a short sale may be the only option.
4. Reduced Income
If your salary or wage is cut and you can prove it, the bank or mortgage company may consider settling your mortgage for less than what you owe.
I’m sure you can see the pattern emerge here that the bank or mortgage company is going to want proof that you can no longer afford to live in your home. In order to go through the lengthy and expensive foreclosure process, the bank/mortgage company may allow you to sell your home on a Minnesota short sale. Typically a short sale is something that is attempted before a foreclosure happens. If at anytime you feel that you won’t be able to pay your mortgage, please give us a call to discuss your options. We are here to help you try to avoid a full foreclosure!
It is important to note that every situation and every bank is different. The information above is general and may not apply to your situation. Please call us if you would like further information about your particular situation.
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