Banks all require that you provide them with a certain set of documents in a Short Sale package. The following are the documents that most banks all require before they entertain a Short Sale

1.) A hardship letter from the homeowner outlining what is causing missed payments and what the homeowner has done to try to change the situation.

The letter should start with a brief identification of the property, the loan number and a sincere apology for the situation.

Then the homeowner should tell in their own words exactly what caused the missed payments. Extensive medical bills? Job loss? Did the homeowner retire, cutting income substantially? Has an adjustable rate loan readjusted? Is the home underwater on its mortgage? Has the homeowner been transferred to another part of the country and the home is not selling? All of these are valid hardships that can be explained in a letter to the Lender’s Loss Mitigation Department.

Also include a description of any efforts the homeowner has made to resolve the problem. Has a new job been found? Have they eliminated all discretionary spending?

2.) Everyone who contributes to the household income should submit their two most recent pay stubs. This can be payment from an annuity, child support, alimony, and any commission income from the last few months.

3.) The bank will also want to see profit and loss statements and balance sheets from any business the homeowner might own.

4.) In order to get an idea of the homeowner’s spending habits, the bank will want to see your last two months’ bank statements. If the homeowner has a lot of credit card debt, they might be able to get a debt counselor to work with the Lenders to restructure the debt to have lower interest rates and monthly payments or forgive some of the debt altogether.

5.) Tax returns from the previous two years. The bank wants to see these so they can get an idea of the homeowner’s financial security as well as their ability to make good on their debts. This also comes in handy for the bank because they can see if the homeowner has any resources that the lender can tap into if they foreclose on the property and decide to pursue a deficiency judgment against the homeowner.

6.) The bank also wants to see a realistic budget for the homeowner. If the homeowner’s budget is $300 above or below balanced on average, they might be able to restructure their finances if they prefer to save the house.

7.) The bank will also want to see a listing agreement with an asking price. The listing should include the agents normal commission as well as standard closing costs. In almost every case, Lenders will pay closing costs and commissions to agents if they approve a Short Sale.

8.) Your offer. You should also provide the bank with your power of attorney that gives you the ability to negotiate with the bank and list the property with a real estate agent on the owner’s behalf. If you don’t have the documents, you won’t be able to do these types of deals.

9.) Power of Attorney. You must have an authorization form giving you or your negotiator permission to talk to the Lender. This is actually the first document that you should obtain from the homeowner so that you can obtain any special instructions from the Lender before the Short Sale package is submitted.

Just collect these documents and you are well on your way to getting a short sale done!

Learn more about short sale investing. Stop by Bob Massey’s site where you can find out all about how to do a short sale and what they can do for your lifestyle!

Regular assessment of your household finances is important to the family’s financial well-being. The following tips will help you take charge of your household finances.

Credit Card Use

If you have a credit card, use it, but don’t forget to pay the entire sum, not the minimum amount, at the end of the month. Use your credit card wisely.

Rule of Thumb

Household expenses should be lower than 33% of household income. If it is higher, think of cutting down your expenses. Below are useful tips to cut down your household expenses.

1. Cleaning of air-conditioners should be done regularly.

2. When you do the laundry, do it full load.

3. Put thimbles on your taps

Allocate Book Keeping Reponsibilities to Your Kids

Do you have children? Think of assigning simple tasks such as data-entry to them. This will make them understand basic financial principles. It will also teach them to become responsible and promote good financial practice.

Organize Your Financial Statements

Take note of your finances. Have a notebook or a ledger. If you have an access to a computer, organize the physical bills and statements by putting everything into a spreadsheet. You don’t even have to pay up cash for a spreadsheet.

Here are some tips in organizing your financial statements.

1. To save time from entering data, get soft copies of bills and statements, if possible.

2. Back-up all your files, save them into CD-R or thumb drive. Then keep them in a secure place.

Financial Planning

If there is only one in the household is working, and there is not much sources of income, consider an insurance plan for the breadwinner. Financial worries are not something your family should cope with in the event the sole breadwinner is incapacitated.

Make It a Routine

When you are not doing your task, it piles up. Give at least half an hour each week to analyze your finances.

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