If you have plans to conduct a short sale part of the process is a financial disclosure. They also have a "look back" process, meaning if you have a large chunk of money in an account, and the account shows that you closed it, they will ask "where did you put the money?". I have heard for the most part sad stories regarding how much money a lender will allow a short sale seller to keep.
When you sell short that means that the lenders are going to take a big hit. So they are looking for any assets that you have to help offset their loss. That could include vehicles, jewelry, valuables with cash value.
Most people who are in a short sale need to prove hardship. That means you are unable to pay your bills. I agree with the other posts, if you are at the breaking point, then a short sale would be the best way to go.
The worse thing you can do is WAIT and see all your savings go to zero.
Your steps should be:
#1 Call the bank and try to modify your loan to fit you life style or . .
#2 Call a person that specializes in short sales and protect you in the process
#2 Sell your home and convince the bank to accept less money & get rid of the burden
I invite you to read my eBook "When is Short Sale an Option for YOU" in the link below.
The main criteria is the hardship...and whether you are behind in payments or not. Many lenders will let you proceed with a short sale even if you are current on your nmortage, but there are some (like Fannie Mae) that will not process a short sale unless you are at least 30 days behind in payments...keep in mind, the process is evolving on a weekly basis with the lenders and the industry.
More lenders today ARE requiring sellers to contribute cash to a short sale to make up the lender's net approved amount. The reason is simple - the big government bailout is benefiting the lenders - not the homeowners as they portrayed it. The lender gets paid from the gov't stimulus behind the scenes for non-performing loans that are in default, so then the lender becomes greedier and looks for anything they can get from the seller in the short sale. Even clients with no savings are being asked to take out a second 401k loan to contribute - which is like digging a deeper hole for the seller to jump into...makes no sense...
If you have more questions, read my FAQ page on the website...it answers just about any question you may have.
You need to work with an experienced short sale agent so that they can negotiate with the lender to accept the short sale without paying any money because you need for future rent,food other living expenses..... so work with an experienced short sale agent who knows how to negotiate with lenders. Consult with your CPA or attorney for any tax ramifications.
I specialize in short sales & credit reduction. Feel free to contact me if you have questions or ould like additional information
If you are unable to make payments on your mortgage and need to sell to make it out from underwater, then you should be eligible.
Please let me know if I can help you further.
I wish you much luck!
Keller Williams Excellence