If you’re having a tough time keeping up with mortgage payments on your Washington home, a short sale may have come to mind to deal with the situation. This article will discuss how to write a letter of hardship if you’re in the midst of a short sale.
A short sale is when a Washington state property is sold for less than its remaining mortgage principal balance and executed as a way for both the existing homeowner and mortgage lender to reduce their respective losses.
How Do Short Sales Work?
Typically, although not always, short sales are reserved for situations of extreme financial hardship; just prior to a bank beginning foreclosure proceedings.
Unfortunately, many American homeowners find themselves in a precarious position where they are unable to keep up with their mortgage payments because of financial hardship. In cases where payments are missed, certain steps may need to be taken in order to avoid foreclosure, and a short sale is one of them.
Short sales are not automatic, however. Homeowners must often prove the merits of a short sale to their lender, which often involves documenting that selling a home for less than its worth is the best and most viable option for all parties involved.
The short sale process starts with a letter of hardship.
What is a Letter Of Hardship in Washington Short Sales?
Essentially, a letter of hardship is a document that details your situation and document that explains your circumstances in a certain situation and typically shows that you are financially unable to pay your debt. These are usually used by homeowners who cannot make their mortgage payments and provide a way to seek leniency from mortgage lenders.
To prove your short sale worthiness to the bank, you’ll be asked to submit a cover letter that explains your hardship and to provide full financial disclosure. You will also need your original purchase contract, a balance sheet of your income and expenses, your asset statements and proof of income, and two years of federal tax returns.
Lenders prefer handwritten letters and are more apt to agree to a short sale for homeowners who may have lost jobs or encountered significant medical bills, as opposed to those who engaged in careless spending.
Draft a compelling letter and avoid extraneous details. Be short, be thorough, and be complete.
Factors That Can Speed Up a Short Sale
In addition, note that the following traits can help speed your short sale approval:
- The home is marketable
- A second lien holder, if one exists, is amenable to short sale proceedings
- A foreclosure is not scheduled within the next four months
Choosing to short sale your home is not something that a homeowner should pursue alone.
The process of selling a home in a “distressed” state is significantly different from selling a non-distressed home. Homeowners selling in a short sale should seek the advice and counsel of an experienced real estate agent.
Have Questions or Need a Mortgage Loan?
Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We offer a wide variety of mortgage programs and products with flexible qualification criteria, and have been helping borrowers since 1992. Please contact us if you have mortgage-related questions.