Dispelling the 10 Most Common Rumors (Lies) About Short Sales
Separating the Facts from Fiction
Let’s Separate the rumors from the facts and establish the truth. The bottom-line on short sales is this: Short sales represent the most powerful foreclosure alternative for homeowners who absolutely need to sell but owe more on their homes than what they are worth. As with anything powerful though, myths, rumors and lies develop that can cloud an otherwise clear and concise process.
Rumor #1 – Banks Would Rather Foreclose Than Do A Short Sale
This is a very common myth that is very far from the truth. The bank does not want your property as it represents a liability to them. Banks are in the business of loaning money, not holding property. Foreclosing on a property represents a huge financial loss for a bank and contributes to the bank’s insolvency (a term used to describe an institutions liabilities vs. its assets) and cripples their ability to lend money. Furthermore banks net substantially more money through a short sale a suppose to foreclosure.
To qualify for a short sale you must demonstrate the following:
- Financial Hardship – You have unforeseen circumstance that has made your mortgage unaffordable.
- Monthly Income Shortage– You are not making enough to afford the mortgage
- Insolvency – You do not have significant liquid assets that would allow you to pay down your mortgage. Read more…
