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So, what is a short sale you ask? And what are some of the pros and cons if I decide to Short-sale my house?
A short sale is when your lender agrees to accept less than what is owed on the property. This usually happens when a homeowner falls behind on payments and cannot continue to pay his/her mortgage, but not always the case. A short sale can still be achieved even while current on mortgage payments. This all depends on your mortgage lender.
Note: Be advised, this agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
For some homeowners, selling their homes is actually the relief that they need. Upon reviewing your financial situation, it may become evident that you can no longer afford your home. Many homeowners have often realized this and tried unsuccessfully for months to sell their homes through traditional real estate methods. But, because of changing market conditions beyond your control, sometimes your home may not sell at the desired full price of your loan. A Short Sale allows you to sell your home to a third party at a price that is less than the total amount that you owe.
Example: A homeowner, who is current or facing foreclosure, has an existing first mortgage of $250,000. Because of changing real estate market conditions, property values have declined. Upon researching the area and comparing similar properties that have sold within the last 3 to 6 months you figure your property will sell for no more than $200,000, which will be accepted as full payment for the loan. This is a short sale. (Other options may include a Loan Modification, Bankruptcy, foreclosure, and/or consulting with your local Real Estate Investors, Attorneys, and Realtors.)
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Pros and cons.
You’re in control of the sale
Avoid the word “FORECLOSURE” on your credit report. Lenders report differently and some do not report them to the credit bureaus at all.
A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level.
Even if you were behind on your mortgage payments and a sale is granted by your lender, you may still qualify to buy another home with a Fannie-Mae-backed mortgage within two years, regardless of whether the home is your primary residence.
If you’ve had a foreclosure notice filed, you may be able to postpone that action while the bank considers your sale. The wait for approval can be from 2 to 3 months or longer.
Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions.
Not all sellers or all properties qualify for short sales.
Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose.
Always obtain legal and tax advice before making a decision to proceed with a short sale.
Are you searching for help with the Short Sale problem in Charlotte, NC? Call us now! We, Alliance Credit Counseling will counsel homeowners, and guide them through it, and act as an advocate on the homeowner’s behalf. Who we are? See it here: Alliance Credit Counseling