This original question came up on Trulia Voices yesterday and was worth addressing here as well … “how do I know if I qualify for a short sale?”
The short answer is qualification is in the eyes of your lender. A good hardship letter helps – a letter detailing all the reasons you no longer can make your mortgage payments – but it’s still of limited utility. A lender’s not going to read the letter and decide, “Good enough! We’ll write off that other $150,000, no problem.”
Whether you qualify or not is going to depend greatly on your financials … the process of qualifying for a short sale really is the process of demonstrating that you don’t qualify for your loan. Once it’s clear to the mortgage company that you simply can’t pay, they then have two choices … agree to the short sale or foreclose.
(We’ll leave out option three, which is some sort of twisted extended limbo that I’m seeing on rare occasions.)
Before going down the short sale road, though, make sure you talk to a tax professional. Depending on the details of your loan, the debt the lender writes off may not go gently into that good night and instead may bite you come tax time if you’re not prepared.
[tags]Phoenix real estate[/tags]