When a homeowner can no longer pay off their mortgage in Charlotte, NC, the house may be foreclosed. However, a short sale is a better alternative to an eventual foreclosure. In a short sale, a house sells for less than, or short of, the amount left on the mortgage. This frees the homeowner of the financial burden of the house. This money is paid directly to the bank and not the homeowner.
When a homeowner is in true financial distress, a short sale may be the best option for all parties. For the homeowner, once they sell the house, they are free of the mortgage that they were unable to pay. This comes at the expense of a hit to their credit rating though. For the bank, if the homeowner is incapable of paying in any form, a short sale is preferable. A foreclosure can cost the bank more. For the individual who purchases the home through the short sale, they get a home at a lower price.
Getting a short sale approved isn’t straightforward. It can take a long time to close, even if there is a buyer ready. In a foreclosure, the bank is tasked with finding an interested buyer. In a short sale, it is up to the homeowner to find a buyer.
Why Does A Short Sale Take So Long?
A short sale can be time-consuming. It can take months to complete one. Many factors result in this.
- Finding a buyer can take time. It is up to the homeowner to find a buyer for their Charlotte, NC property. This may take longer if the seller is not well versed. Finding an agent to go through this process for you is the best option. It is even better if you can find an agent experienced in short sales in the area. This can dramatically speed up the process of finding a buyer.
- The bank must approve the sale. The money off the short sale is going to the bank. In a short sale, the bank always incurs a loss. A bank is a for-profit business, so they will take their time to ensure that whatever loss the home is sold at is minimal. They will also want to ensure that the loss they will make is inevitable. This is why they will want to look at the assets of the seller. This is to ensure that there is truly no means of actually paying the mortgage.
- There is a lot of paperwork. There may be as many as hundreds of pages in a short sale. These pages will need signatures, from the buyer, the seller, and the agents. After this is completed, all documents must arrive at the bank in one piece. The document will tend to be rendered void if a page is missing.
What Are the Advantages of a Short Sale in Charlotte, NC?
Homeowners who don’t have the finances to keep up with their mortgage have two choices. They can either opt for a short sale or have the house foreclosed. For each option, there are benefits. But short sales are generally preferred for the following reasons
- There is less of an impact on credit. It is important not to misunderstand this. A short sale on a house you owned will impact your credit score significantly. Depending on your credit score before the short sale, the impact may vary. It can reduce your credit score by up to 160 points, though tends to be less. A short sale will also remain on your credit record for up to 7 years, though it can be as little as 3 years. This is preferable to a foreclosure, which typically lasts about 7 years.
- A new home can be purchased much sooner. Unless you’re planning to pay for your next home in cash, a short sale is preferred to a foreclosure. It will be near impossible to get financing for a new home within the 7 years that foreclosure is on your record. Banks look at foreclosure as a warning sign for them not to finance you. A short sale is more favorable in this regard as it lasts a shorter time on your record. In some cases, you can buy a new home in only 2 years.
- A foreclosure can be expensive and stressful. You are not in control at a foreclosure; your lender is. You will have to deal with the stigma of foreclosure and many complex documents. The legal fees involved in a foreclosure make financial distress worse as well. By opting for a short sale, you are an active participant in the process. Selling the house is somewhat like a regular sale, and you have more control in the process.
- It provides more time to live in the home. Your lender will expect you to ensure that the home remains in good condition for the eventual sale. You can remain living in the home up until the point that the short sale is closed. At that point, the lender will give you an ultimatum to move out. There are financial issues that might have led to a short sale in the first place. So this can help save money as there is no need to pay rent or mortgage.
How to Make a Short Sale Easier in Charlotte, NC
There is a lot that goes into the process of a short sale. It comes with a lot of advantages over a foreclosure, but it can be stressful. In addition to this, putting together your short sale package can be confusing. A short sale package typically includes the following:
- Tax returns for the last two years
- Bank statements for the last two months
- Pay stubs for the last month
- A hardship letter
- A financial statement
- A W2 (wage and tax statement) form for the last two years
And this is only some of the paperwork required.
Sorting out a short sale in Charlotte, NC, can be made much easier by getting the right agent. If you opt for an agent with experience in short sales, you’ll find the process to be easier than you could have thought. They can ease you through the paperwork and free you of stress in the process. They can also help you get a buyer as fast as possible to cut down on any waits. The right agent will make sure that your short sale gets completed successfully and fast.
If you live in Charlotte, NC, and you’re looking for an agent with experience, Nancy Braun is the one. With a lot of experience in the region and the expertise in short sales, she’ll make the process as easy as possible. You don’t need to worry about the stress of a short sale. Call Nancy Braun at 704-997-3794, and she’ll guide you through to a successful sale.