In the final part of this five part series “5 steps to preventing foreclosure” we’re going to cover short sales,
the final option that every Orange County homeowner should consider before choosing foreclosure.
Short Sale vs. Foreclosure
Banks prefer short sales vs. foreclosures for variety of reasons including:
- Speed – Short sales can take a minimum of 20 days to complete (depending on lender)
compared to 60 to 120 days that foreclosures can take for completion.
- Loss – A lender will take less of a financial loss on a short sale compared to foreclosures where
they can lose up to $80,000 or more on a home.
- Stability – Short sales help to stabilize neighborhoods and raise home values because, with less
homes sitting vacant in a neighborhood, more buyers will want to move to a well-populated, safer
- Credit – A short sale in Orange County, California or any other part of the country will leave less
of an impact on a homeowners credit report and they may be able to buy another home in four
years or less (depending on lender).
Understand the Short Sale Process
Step 1 – Hire a top Orange County Short Sale agent like Fred Sed & Associates that specializes in short
sales. This step is the most important part of the process because, a short sale specialist can help you
with every part of the short sale process like writing a hardship letter plus they don’t charge an upfront fee
and only get paid once your short sale is approved.
Step 2 – Find out which financial documents your bank will require and then create your packet. Many
lenders typically require at least two years-worth of W2’s, income tax returns, paycheck stubs, bank
statements and proof of other sources of income.
Step 3 – Practice sound financial principles during the short sale process. If your lender pulls your credit report and
sees that you recently went to Maui before your short sale, they will think that you have enough money to
make your mortgage payment and will not grant your short sale.
As of March 2012 more banks are approving short sales than ever before including Bank of America who
recently announced that their approval time for short sales has gone from 30 days down to 20 days.
Many lenders including BoA are now paying homeowners up to $30,000 dollars or more to short sell
their homes so now is the right time for homeowners who live in underwater homes or are dealing with a
financial hardship in Orange County to start the short sale process.