How do you get a bank approval for a short sale?

How do you get a bank approval for 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.

How long does it take a bank to approve a short sale offer?

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.

Does the bank have 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. The seller delivers the lender’s required documents to the agent. The buyer submits an offer subject to lender approval.

What is a short sale approval letter?

A short sale approval letter is a letter that a lender issues to the seller if a short sale offer is approved for less than the amount the borrower owes on a mortgage. It is sent by the lender at the end of a short sale to demand the “short” loan payoff in return for releasing the lien on the property.

Why would a bank deny a short sale?

A short sale happens when a lender sells a home for a price that doesn’t cover the mortgage plus the cost of selling the home. Banks may reject offers when the price is low, the seller or buyer doesn’t qualify, the application is incomplete, or the loan has already been sold.

Can you pull out of a short sale?

Because the short sale approval process is often long, drawn out and lender approval can’t be guaranteed, the buyer can back out if it takes too long. A buyer can walk away from the transaction if the lender fails to respond or approve his offer within the time period specified in a short sale addendum.

How much time do you have in a short sale?

The actual time frame for a short sale can vary a lot. The time to close depends on where you live. It could be way longer if multiple lenders are involved. And 60-90 days is just an average, meaning by definition that some take less time and others more.

What happens after a short sale is approved?

As soon as you have short sale approval, your home enters escrow, and you agree to the short sale terms. Pending an appraisal and a buyer’s accepted offer, you’ll schedule your move from the house at or before closing.

How long does it take for a short sale to close?

Be aware the short sale process could take much longer than a traditional home purchase. Even with a qualified agent, it’s not uncommon for short sale transactions to take six months or more to close.

Do I have to pay taxes on short sale deficiency?

If your mortgage lender forgives the deficiency after a short sale, you might owe federal taxes on the forgiven amount because it’s considered income by the IRS. The rationale behind this is that a borrower who is relieved from the obligation to repay a debt has, in essence, received income.