Can you do a short sale with a second mortgage?
A second mortgage, just like a first, gives the lender the same power to foreclose as the primary mortgage. The second mortgage holder has to give permission if you want a short sale instead.
Does a short sale require lender approval?
A short sale in real estate is one in which a house is sold for a price that is less than the amount still owed on the mortgage. It is up to the mortgage lender to approve a short sale. The difference between the sale price and the mortgage amount may be forgiven by the lender, but not always.
Why would a short sale be denied?
A short sale is sometimes denied due to something as simple as the seller being current on paying their mortgage. The bank’s guidelines might state the bank isn’t allowed to approve a short sale if the mortgage payments aren’t in arrears.
How does a bank approve a short sale?
Gather the necessary documents for approval. Lenders typically require financial documents, such as your pay stubs, proof of unemployment, prior-year tax returns and bank statements. Proof of hardship will be required. Gather all your bills, such as medical expenses, that support the need for a short sale.
Can you do a short sale with equity?
So if a second mortgage, tax lien, or home equity line of credit is on the property, all have to sign off on the short sale deal—not just your first mortgage lender. But it’s often not in the other lienholders’ best interest to accept the short sale.
What happens to liens in a short sale?
During the short sale process, you must get all creditors to release their liens. They may do this if you agree to pay them in full or make other payment arrangements. Some lien holders, such as the IRS, may agree to take a full loss and release the lien for zero repayment as a result of your financial hardship.
How long does it take for a bank to approve a short sale?
A short sale can take up to six months to be approved because many factors can slow the process down. You might be able to reduce the time it takes to be approved by asking your agent for some information before making an offer.
Who has to approve a short sale?
Banks generally do not approve a short sale until the bank receives an offer from a buyer. Therefore, the usual way a short sale can be approved is for a buyer to submit an offer.
Will the bank take less on a short sale?
Understand that with a short sale, if the appraisal comes in lower than the offer price, it’s usually up to the buyer to cover the discrepancy. There’s little room for negotiation with the seller, and it’s unlikely the bank will lower the price at that point.
Why would a lender approve a short sale?
Motivated sellers: The seller wants to avoid foreclosure, and the lender wants to recoup losses, so they’ll work diligently to approve a deal, which can put the buyer in a better position to negotiate the Short sale houses typically have a lower price too, since the seller and lender are prepared to take a loss on the …
Who owns the house in a short sale?
A short sale is when a home owner sells his or her property for less than the amount owed on their mortgage. In other words, the seller is “short” the cash needed to fully repay the mortgage lender. Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them.
How fast can a short sale close?
Mortgage lenders prefer to close short sales within 30 days or less after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.