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The first thing you will want to find out is if you’re eligible.

• Have you suffered a hardship?  This can mean divorce, unemployment, death, etc..
• Do you owe more than the house is worth?
• Impossible for you to modify your current loan
• You cannot afford to pay your mortgage.

If you qualify you may be required to submit some or all of the following documents.

• A letter of authorization allowing your lender to communicate with the bank.
• HUD-1 or preliminary net sheet
• Completed financial statement
• Seller’s hardship letter
• 2 years of tax returns
• 2 years of W-2s
• Current check stubs
• Previous 2 months of bank statements
• Comparative market analysis or list of recent comparable sales

If you’re lender finds that you are eligible and you move ahead with the process you would want to find a realtor who specializes in short sales. They will help you find the current market value of your home and expedite the entire process. They can save you a lot of time and wasted energy.

The short sales process is one that is often used by homeowners who are trying to avoid getting caught up in a foreclosure. Thus, receiving approval from the lender to short sale allows them the opportunity to sell their property at a significantly lower rate. It is also important to compare short sales and foreclosures to ensure you are making the right decision.

To most people, it sounds rather strange for any type of lender to be willing to accept a lower amount from homeowners than what they truly owe on their home. There is more than just one reason why a bank chooses to accept short sales. The key reason is, simply put, that a short sale costs them much less than what a home foreclosure would. The expense banks already have to consider from foreclosures is astronomical. They will also be able to supply you with information in regards to benefits received from short sales. However, when they provide homeowners with the option of a short sale, they are then able to recover at least a partial amount of what they would otherwise completely end up losing. When a bank has several home loans that are non-performing, the Federal Reserve will often lower the amounts or even suspend funds they provide to these lenders.

Different Options Available
There are also two different options in regards to short sales that a credit union, bank or other lender might offer. Before attempting the short sales process, it is vital to find out which one it is that your lender offers to homeowners. These options are as follows:

1. Deficiency Judgment – In using this type of short sale option, the homeowner will be held liable to pay whatever difference there may be in the short sale and the balance of their mortgage loan. It is important to note that short sales information of a deficiency judgment will stay on a homeowner’s credit report until the balance is paid. Short sales of this nature frequently take numerous years to pay off, as the balance generally equals thousands of dollars.

2. Payment in Full w/out Pursuit of Deficiency Judgment – This particular type of short sales option is the most popular choice among most homeowners. They do not have to worry about moneys that are required above the amount their property is sold. This means they are free and clear of obligations after the process is complete of short selling their property.

If the process of short sales is something you must consider it is necessary to contact the bank as soon as possible to gain short sale information on the type of options that are available to you, along with information in regards to short sales vs. foreclosure.