This is Part 1 of a 2-Part Series.
Sadly, houses recently purchased with the $8,000 First Time Homebuyers Tax Credit are now starting to fall into default. Life events such as job loss, income reduction, injury, illness and divorce can strike anyone at any time, including those who hurried up to buy a home in time to pick up an $8,000 check.
Not Enough Time To Build Equity
These houses were bought in a declining market or at best in a market struggling to stabilize. Many houses were bought with very little down payment.
In order to sell fast the price needs to drop to compete with all the other houses, which means more money needs to be brought to closing.
What Happened to the $8,000?
If the $8,000 was spent then it’s gone.
If the $8,000 was socked away in savings, and a financial crisis erupts, that money turns into survival money and quickly gets depleted.
So what to do?
A short sale is often the best solution. The lender accepts an amount SHORT of what is owed, hence the term “SHORT sale”. The lender usually forgives the shortfall and pays the seller’s closing costs including the Realtor commissions. In the Louisville, KY area please call me any time at (502) 664-7827 for more information.
Part 2 of this series addresses the question of repayment of $8,000 tax credit if the house sells within 3 years of the purchase. Click here for Part 2.
Comments(1)