Many homeowners are struggling to keep a mortgage paid and at some point the home selling discussions begin.  Not a fun place to be, however it is what it is.

The first step is to obviously understand your finances.  Assuming you've already completed that and you've decided you must sell the house. go to step 2.

The second step is to determine the house's market value vs. the mortgaged amount.  If you've bought the home from 2003 to now or you refinanced during the same time frame pulling cash out and increasing the loan amount, you are most likely underwater.  If that is the case, selling would require bringing cash to the table or asking the bank for a short sale.  An article about Asking Prices vs Market Value was just published here a few days ago.  

The third step is to determine if you have a true financial hardship.  Your bank will most likely entertain taking a payoff on the loan for less than you owe, IF, and that is a BIG IF, you can demonstrate a true financial hardship.  So what is a financial hardship?  A financial hardship is a proven fact that you can no longer pay the mortgage with your current income OR the inability to pay/default  is imminent.

imminent = likely to occur at any moment.

Some hardships that result in financially being unable to continue paying:

  • Job loss
  • Divorce
  • Loss of spouse
  • Reduced income from previous
  • Medical emergencies
  • Military relocation
  • Adjusted mortgage to higher payment
  • Job relocation*

*Job Relocation:  this one is a little sticky.  I've recently had a Wells Fargo Short Sale Negotiator tell me that a job relocation is not considered a hardship - and denied a relocation short sale.  Within that exact same week, Wells Fargo approved a Short Sale for a gentleman that had just been relocated due to his job.  That's the bank shenanigans that have the real estate industry up in arms.

When looking at your own financial situation, be real about the ability to pay, the financial hardship, and your finances.  The banks don't care about the emotional story, they are just looking at the numbers.  Is it tight but you can still pay or is it impossible to pay?  That's the real question.

The final step is to contact a professional Short Sale REALTOR who can give you the appropriate guidance through this tough situation.....Meet Brad.

As always,  I recommend you speak with an attorney to know your rights, and speak with a tax adviser to understand any tax implications.

Posted by Brad Officer on
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