Short Sales - what is a short sale?
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Of all available options, foreclosure is the worst
Consider a short sale when foreclosure seems inevitable
Almost any option is better than foreclosure |
What are the benefits of a short sale? When a short sale is achieved, there will not be a foreclosure.
Protect your credit - foreclosure damages credit up to 7 years and bankruptcy up to 10 years. Many experts believe that a foreclosure is much worse than a bankruptcy.
Under most short sales negotiated you, the homeowner, will be relieved of this possible future headache.
What is a hardship? -
Reduced Income or Unemployment.
Inability to work due to health reasons.
Separation or Divorce.
Medical Bills.
Business Failure.
Death of a Spouse.
Adjustment in mortgage payment or unforeseen increase in your monthly expenses.
Any other circumstance that cripples your ability to repay your mortgage.
What Happens If you don´t do a short sale or your short sale is unsuccessful?
The result is the same: A Foreclosure, the goal is for you to avoid foreclosure, which will affect your credit more than a short sale. Generally a foreclosure is one of the most damaging occurrences in a credit history. Most likely you will miss mortgage payments through the course of a short sale and this will show on your credit history. But at the end of the day, when your short sale is completed, your credit report will show that your mortgage has been completely "satisfied" and typically your credit score should almost immediately rise by 65 points.
As previously mentioned you, the homeowner, will bear no costs - we will negotiate with the bank and typically, we have found with my other shortsales, the bank will accept 82% of either the appraised value or what is owed. If you have stopped paying your mortgage then you need to seriously consider the route you would like to take.
The Morgage Foregiveness Debt Relief Act of 2007 - "This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home´s value or the taxpayer´s financial condition"
As I am not a lawyer, the information on this page is for informational purposes only so before entering into this type of sale be sure that you are educated on how this may or may not affect you. BEWARE of scams - always use a reputable REALTOR.
Go here if you still have questions? Please call me.