Short Sale Process in Arizona
Many people do not have a clear cut idea about the short sale process in Arizona. When a homeowner is behind the monthly payments to the lender for an extended period of time due to different reasons like sickness or loss of income, foreclosure becomes imminent.
In such a situation, the real estate transaction known as short sale is the most suitable option and it benefits both the seller and lender as well. The potential buyer can put forward an offer to the seller for an amount less than what is owed currently and the lender analyzes the situation before accepting the offer and also absorbing the loss of difference owed. You may wonder why a bank or lender would agree to take such a loss but a deeper analysis clearly shows that it becomes the best option at certain circumstances.
Short Sale Process
This video provides details about short sale process and how it works in AZ and other states.
More Details on the Short Sale Process in Arizona
Foreclosure vs. short sale
When loan repayment becomes a difficult task for you, you have two options and they include foreclosure or short sale. Many lenders have realized that foreclosure is not the most viable option for them because the lender has to incur different types of expenses like legal fees, remodeling and maintenance costs and costs involved with reselling the property and, the home may remain as a non performing asset for the bank or lender as well. These types of assets lower the rating of the bank and they disturb the smooth flow of income. Various studies have clearly shown that banks lose 20% to 30% more when they opt for foreclosure, compared to Arizona short sales and that is exactly why most banks or lenders prefer short sale over foreclosure in Arizona.
What is the impact of a short sale on your credit report?
The short sale will show up on your credit report as a pre-foreclosure in redemption or settlement or settlement for less than owed. When you fail to make payments properly, your credit report shows a few ‘lates’ but you can easily get them off within a few years or less. In normal circumstances, short sale drops your credit score by 100-200 points and a foreclosure can cost your credit rating up to 200 to 280 points. You may need 7 to 10 years to remove the impact of a foreclosure from your credit report as well. In order to remove the negative impact of a short sale process in Arizona, you can join a good credit repair program immediately after the sale and another option available is to negotiate with the lender so that reporting of the short sale to the credit agency is avoided.
Learn about these different options
So, you have come to know what Arizona short sale process is all about and the impact it makes on your credit report. Now, you need to create better understanding about different options available before arriving at a decision in a hasty manner and it is always advisable to work with the lender to arrive at the most feasible conclusion. You can get into an agreement with the lender to prevent foreclosure by paying the total amount owed within a specified date and it is known as reinstatement. Another option is known as forbearance and it is an agreement to suspend or reduce the payments for a small period of time. You can also talk with the bank to develop a new repayment plan until the missed payments are covered and the fourth option available is claim advance or partial claim. If your loan is insured, you may qualify for an interest-free loan from mortgage guarantor to make the account updated.
Hire a reputed Arizona short sale company
For expert advice and solutions; you can contact a reliable short sale company in Arizona. The stringent laws in Arizona protect the interests of both the lender and buyer and, you need to hire a reliable and reputed short sale company in Arizona to prevent any unethical and illegal practices. First of all, you should prove that you are in a financial hardship and it has to be documented in a convincing manner. The details to be submitted include Federal IRS tax returns, pay stubs from the employer and letter describing the reasons that led to your financial problem and, you need to determine the most deserving value for your home. A reliable short sale company in Arizona can help you prepare all these aspects and they conduct a detailed market analysis to arrive at the best price. Although it cannot be used as the formal appraisal, you get a realistic idea about the actual worth of your home. Some people make the mistake of hiring a realtor only and such a method of approach may not bring you the desired results. Top short sale companies will help you handle all related paper works and they will also guide you through the entire procedure with great accountability.
What does the short sale packet contain?
Based on our experience the complete package of the documents and details to be submitted to the lender is known as the “short sale packet” and it contains:
- The letter from the home owner explaining the reasons behind the repayment lapses and financial hardship. It should be clear and legible and most lenders prefer hand written copies over printed ones.
- IRS tax returns and IRS W-2 forms for the last two years
- An authorization letter that provides legal permission to the Arizona short sale company to communicate and negotiate on behalf of the homeowner.
- Two recent bank account statements of the homeowner.
- An updated financial statements from the homeowner stating the income and expenses.
- Other related financial documentation that reemphasize the financial hardship
- The market analysis of the home and it should be an updated one.
- An estimated net sheet or HUD-1 form.
- Purchase and sales agreement that substantiates the fact that the new buyer has the finds to buy the home.
If you want to make the short sale process in Arizona hassle free, you need to hire a reputed short sale company. Top companies always have a team of experts capable of handling different tasks with utmost efficiency and commitment. Such a method of approach always helps you complete the short sale in a reliable, ethical and friendly manner.