What are short sales? They happen when a lender is willing to accept a lower pay off on a loan than what is currently owed. The borrower will owe more on the property than the home is worth at its current state, however, they happen only when a homeowner qualifies through some kind of hardship.
Why should I sell my home short? To settle for a foreclosure means accepting the damage to your credit a foreclosure would bring. It also means accepting the fact that in many states, the lender will seek a deficiency judgment in the amount that is owed. A short sale by itself will typically lower your credit score by 50-120 points, however the hardest hit on your credit will be from missed mortgage payments, not the short itself. Your credit will usually recover from such an action in as little as two years, whereas a foreclosure could dampen your ability to take out any future mortgage loans for at least five years. In some cases, it may be better to sell to an investor who will bring your loan current first, then liquidate it when the house resells.
Do I get any money back when I sell short? In many cases, cash back incentives are given to homeowners who complete the short sale successfully. Your bank "may" offer up to $3,000 cash back to help with relocation expenses. It is conditional and has to be requested at the time of application generally.
How do I qualify for such a sale? While lenders have become more lenient in recent times, there are typically three qualifications required for a short sale.
1. Financial Insolvency (no other major assets),
2. The proceeds from the sale of the property, after all closing costs are paid, are less than the amount currently owed on the property, and
3. Financial hardship. Acceptable hardships may vary, but some common ones are; loss of income or employment, divorce or separation, relocation or job transfer, property in need of repairs without resources to make repairs, major illness and medical expenses, death of a family member, vacant rental properties, etc. In most cases, a short sale is not for those who want to sell, but only for those that have to sell.
Who will pay the Realtors® commission? The lender will customarily take care of all fees associated with the short selling process; this meaning your Realtor as well. In most cases, borrowers pay nothing out of pocket to complete such a sale.
What happens with the money that is forgiven by my lender? Any difference on your mortgage will typically be written off as a loss by your lender. Some lenders may send out a 1099 for the amount that was forgiven. However, the Mortgage Debt Relief Act of 2007 states that you will not be required to pay taxes on the money if you short sold your primary residence before the expiration of the bill, which has been extended through December 31, 2013. The bill however is not quite that simple. Consult the appropriate representation in all tax and legal matters.
Can I still sell short even If I am going through a foreclosure? Absolutely. You will not be asked to move out until the closing. If your specialist is actively working with your bank, your lender will typically delay the foreclosure proceedings making it possible for you to stay in your home a little longer.
Legal representation or advice is recommended in all legal matters. This site and brokerage represented is not affiliated with the government. If you use our services, your lender may not agree to accept a short sale or change the terms of your loan. We do not advise you stop paying your mortgage.
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? Whats with the doggie? Well, Miss Piggy is a rescue dog taken away from an abusive home by a veterinarian after he treated her for wounds in which she lost an eye. She is now a very happy doggie and I thought, a much prettier face than mine. She escaped her bad home… as will you, escape mortgage, stop foreclosure and smile:)