New Jersey Short Sale Process
If you are reading this article, there is a good chance you were searching online for information regarding the New Jersey short sale process. Not only have we been on the forefront of short sale solutions for homeowners, but in the process and over the last 4 years of doing them in two states (FL / NJ), we have created countless relationships with lender reps, loan servicers, and those involved in the final decision of approving the deal. The following statement could be seen as a contradiction to some:
Short Sales can be viewed as one of the biggest real estate investment decisions of your life.
Now why would I consider a short sale an investment? Well, for one, if you are challenged with a hardship or are underwater on your mortgage, you are a great candidate for a short sale. From Day 1 of beginning the process, you will have to immediately stop paying your mortgage payments if you haven’t already done so. Banks simply aren’t incentivized to negotiate a short sale if you are proving that you are capable of paying. Typically a short sale takes an average of 6 months from start to finish. During those 6 months, and the inability to continue paying your mortgage, you can begin to save your money for relocation, paying bills, etc… Your own morals will tell you not to take your savings and go on a worldwide cruise…although you can if you really want.. Disposing of a home that has given you stress, hardship, and expendable cash limitations, the end result is like a 10,000 pound weight lifted off your shoulders.
Short sales are a tedious, time consuming, pain in the neck, mostly for the agent that is negotiating the sale for you. As a result of our experience, and established relationships, we offer clear solutions in this lengthy process. A short sale specialist with New Jersey Real Estate Guys will be able to assist in the entire process, educating you before the initial submission all the way to closing. It is important that you are aware of the process before jumping into it. Once you are detailed, a short sale seems like a no-brainer. Ok, you will lose some points on your credit score. But if you have a house to get out of and you are underwater or faced with a hardship, don’t you think dinging your credit is worth it? In the grand scheme of things, the answer is “probably”. With today’s mortgage qualification guidelines, once you short sale, you will likely not be approved for a new mortgage for about 2 years. With government making changes close to election time, I see this easing a bit. So if you do have plans to buy a home, you will need a co-signer, otherwise you can join the millions of other short sellers in renting, figuring out your next steps (which could be fun) and buying in a couple years when you are back on your feet or simply just ready for it.
First, you will need to hire a real estate agent. This is required as the bank will be sure you list your property with a brokerage. During the listing paperwork process, you will need to gather your 2 most recent tax returns, 2 most recent months of banks statements, paystubs, and be required to fill out a financial worksheet (similar to a mortgage application) and create a hardship letter, explaining why you are looking to short sale your home. The letter is very important and an agent with New Jersey Real Estate Guys can help you with New Jersey Short Sales, we are experienced, and we know what the banks are looking for.
Once all of this information is gathered, it is sent to the bank which creates a file for the sale and thrusts you into short sale mode. Once an offer is made and accepted, it goes to the bank for review and that is where the negotiations begin. Your real estate agent will typically make 3 calls per week to the bank to make sure they are on the ball. Unfortunately not many agents spend the time like this, but we do.. This is why we are so successful and are able to achieve favorable terms for the homeowner.
If your loan is insured by Fannie Mae or Freddie Mac, our first preference is applying for HAFA (Homes Affordable Foreclosure Alternative). This is the grand-daddy of short sale programs. It basically wipes the slate clean. It guarantees that your lender cannot ever come after you for a deficiency, it offers a payoff for any second mortgage or Home Equity Line on the home, and it also gives you a relocation cash incentive of up to $3,000. The bank is also agreeing not to take your checking or savings account reserves and using that as collateral. They are aware you need money to live. Keep in mind that if you are proactive in pursuing a short sale before you become TOO delinquent could potentially incentivize the bank to offer additional bonuses.
The final terms of the sale are pretty simple. The bank agrees to release you from debt and also agree to make any backed tax payments, HOA / Co-Op dues, attorney fees, real estate commissions, and all closing costs. The short sale process will not cost you a dime. If you live in a building where the monthly dues include cable, water, heat, etc.. you will need to continue to make those payments if you want your utilities and services. Once the terms are accepted by all parties, the buyer is allowed up to 45 days to close using their own funds or by obtaining a mortgage. If the terms grant you the $3,000 relocation incentive, this certified check is given to you at closing.
In conclusion, you should be anything BUT afraid of the short sale process. We have assisted dozens of short sale homeowners and every one of them have a bittersweet ending. Sad to leave their home, but ultra relieved to be able to start fresh and get out of a difficult hardship. It is so important these days to work with an experienced agent. Every good quality agent has a good quality attorney. The attorney is directly linked in as part of our team as they take care of contractual details. If you or anyone you know are facing the decision as to whether or not to short sale your home, give us a call for a free consultation. You’ll be glad you did and I can assure you that you will hang up the phone with a sense of relief, that there is a brightening light at the end of the tunnel.
Scott Allan, founder of New Jersey Real Estate Guys and sales associate with Weichert Realtors can be reached directly at 877-688-7582.
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