Should I stop making mortgage payments to do a Short Sale?


This is the number 1 question asked by all of our clients here in Texas. In this article, I want to give you some things to think about.  In deciding whether you should or should not stop making your mortgage payments, these are things we have learned from experience and face every day with our clients.

What happens when you make your mortgage payment?

When you are trying to do a short sale  the bank is looking for a hardship, and this can be a number of things. A hardship can be a job loss, Income reduction, Forced relocation, Illness or a divorce. When you continue to make your mortgage payments the bank is less likely to accept your short sale. A lot of investors are rejecting short sales if you stay current. We have had lenders who will tell us just by looking at the file that our clients do not “qualify” because there loan is current.

A lot of our clients struggle with this fact because they do not want the missed payments to affect their credit. Most likely if you are in the situation of a hardship your credit will be affected in some way. If you continue to make your payments the bank will see that you can afford your mortgage and will not consider your “hardship”. The bank will not make your file a priority as you are not in “default”. This is a hard concept to understand as you would think the bank would want to continue to receive payments and still work with struggling homeowners. Unfortunately that is not the case, in order to be considered for a short sale banks will only review if you are in default. Banks are now requiring the homeowners to be at least 30-60 days behind on their mortgage. Although this goes for the majority of the banks, there are still a small few that will work with homeowners without being behind.

When you are considering stopping your payments you need to talk to a professional to see your best options for your situation. Every situation is different, seek help, and do your research. If you are in the Dallas/fort worth area give us a call we would love the opportunity to assist you in any questions you have.

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Comments 2

  1. Dudichikni

    A short sale will lower your credit score by 100 or more pontis.You do need to show a hardship to the lender in order to qualify or get the ok from the lender to short sale your house.Short sales are NOT a quick way to get out of your house. Banks notoriously will sit on offers for months and sometimes not even approve of any of them in the end, which will send you into foreclosure if you stop paying on the mortgage.My guess is, if you cannot show a hardship, you are not going to be granted a short sale.You also would not be buying another house anytime soon with a short sale on your credit report.Just because you are underwater does not mean you can get out from under your obligation.

  2. Nicole Espinosa

    That is correct it is not a “quick” way to get out of your house. Although in our company we close Short sales in about 3 months finish to end. It really depends on the listing agent if they know what they are doing to how long it will take for the short sale to close. We deal with a lot of difficult banks but have several ways of pushing through and escalating the file should a bank be difficult.

    Yes in another blog we have posted we talk about the different hardships that will qualify you for a short sale. A Short Sale is a great alternative to foreclosure and after you do a short sale if you start to pay on time your obligations and mantain your credit you will be able to purchase a home in about 2 years. If someone is in a financial Hardship and can not pay there obligation then a Short sale is the best alternative.

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