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What documents are needed in a short sale?

June 13, 2010


What is a short sale?

A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan.

Unfortunately, there is nothing “short” about short sales so be prepared for a lengthy process far more complicated and frustrating than a traditional sale. But in the end a short sale can save your credit from the long-lasting blemish of a foreclosure.

What documentation will I need to provide to my Realtor and lender?

Authorization Letter
An authorization letter giving your lender permission to speak with your Realtor about your loan(s).

2 most recent months of bank statements
You can use your online bank statements. Just print out the last 2 months.

2 most recent months of paycheck stubs
Be sure to use the 2 most recent paychecks or you’ll delay the process.

Last 2 years W-2s
Employers provide this to employees and to the IRS every year.

Last 2 years tax returns
If you missed filing write a note to the lender explaining this fact.

A hardship letter
A letter describing your financial troubles and inability to handle the mortgage payment.

There are many additional forms and documents that your lender may require, but just about every lender requires these above items. It makes sense to start locating these documents immediately when you believe you’re going to be attempting a short sale.

Your Realtor will need to provide an executed sales contract (both buyer and seller have signed), a comparative market analysis justifying the contract price, a signed listing agreement and a HUD-1 settlement statement.

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