How To Write A Hardship Letter For A Short Sale
You\’ve made the painful decision to let your house go and start over. The easiest thing would be to just let the bank go through its process and foreclose on your house. But you don\’t want a foreclosure on your credit report. So instead you decide to try to sell your house as a short sale. You\’ll find a buyer and your Realtor will convince your lender that the selling price is the best they\’re likely to get. But it\’s not that simple. The mortgage company is still hoping that you can make the mortgage payments. In order to convince them that their only other choice is foreclosure, you need to write a convincing hardship letter.
Lenders know which kinds of things make loans default. If you claim to have a financial hardship, they will want to know specifically what the problem is. And they\’ll want to verify it. Here are some of the more common financial hardships that tell lenders that a loan is not going to succeed.
Your payments have increased to a level that\’s no longer affordable for you. If you were one of the many home buyers who got an adjustable rate loan, you probably qualified based on the initial payment amount. If your income didn\’t increase as much as the payment did, it\’s likely that the new payment amount isn\’t affordable to you now. You are not the only person who thought they\’d be able to refinance their home at a lower fixed rate in a couple of years. Unfortunately if you can\’t get an appraisal that shows that your house is worth more than the loan balance, you won\’t be able to refinance even though the interest rates are low now. Just like when you first applied for the loan, the bank will want to verify your current income. If you make enough to qualify for the new payment, you\’re stuck.
Your income is lower than it was. Many homeowners have lost their jobs or taken pay cuts, making it impossible to make the mortgage payment each month. Business owners and employees alike have found themselves in this situation. Banks recognize the fact that if your income has dropped significantly there\’s not much chance that you will be able to stay on top of the payments, or to catch up if you\’ve fallen behind. If you don\’t have the money, what can you do?
Your expenses are greater than before. Have property taxes risen so much that your home is no longer affordable? Do you have big medical bills due to an unexpected illness? Increased expense or debt make it very hard to pay the house payment. Many times these expenses are not within your control, but even if you made decisions that brought them about, the result is the same: no money for the mortgage.
Divorce or death of a spouse. If you qualified for the loan with two incomes and now there\’s only one, you can no longer afford the house payment. Even in the case of divorce, where both partners still exist and have income, lenders recognize that you\’re no longer going to be living in the home together. The same incomes now must be used to support two separate residences.
Significant damage to the home. Of course the bank required that you have insurance on your home, but sometimes insurance doesn\’t cover all of the damage in the case of a fire, flood or earthquake. If you\’ve been stuck with a sizeable expense due to property damage, this may constitute hardship.
Relocation. If you have to move for your job or for military service, the mortgage company understands that you won\’t be able to keep up the payments on this house while paying for housing in the new location.
Hardships happen all the time. If property values had increased overall since you bought you home, you would be able to see your home, pay off the mortgage and move on. Since home values have fallen significantly in recent years, many homeowners can\’t sell for enough to pay off the mortgage. If you can show the lender that you have a valid financial hardship, they may approve a short sale, which will allow you to get on with your life without the credit disaster of a foreclosure.
When you\’re back on your feet and ready to buy a home again, you can apply for a home loan mortgage online. Just look at these beautiful new homes San Marcos and you\’ll start thinking about how to shore up your credit quickly.
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