Is a short sale right for me?
This has become a hot topic in the real estate market today. Since home prices have fallen many homeowners that bought in recent years or refinance now owe more on their home than what it is worth. If you now need to sell because of a divorce, change in your payments due to an ARM, relocation, or any number of other distressed situation you are faced with possibly needing to sell for less than your loan amount. Unless you have money to cover the difference from the possible sales price you may be looking at a foreclosure, bankruptcy, or a short sale.
The National Association of Realtors estimates that 40% of all homes sold today are distressed situations-either short sales or foreclosures.
So with a short sale lenders agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure process.
Things to consider:
How will it affect my credit?
Normally a short sale will appear on a credit report as a settlement of the debt. Notice of the settlement will stay on the report for approx. 7 yrs. from the initial default date, but the impact on the credit score will not be as severe as a foreclosure or bankruptcy.
Do I have to pay taxes on the difference that was relieve?
The Mortgage Forgiveness Debt Relief Act, passed recently, allows homeowners to avoid taxes on debt canceled on a primary residence.
Can I do a short sale on a home that has a first and second mortgage?
Yes, but this makes a short sales much more difficult if it involves another lender. The lender of the second mortgage often has to agree to a total loss.
Can the lender make me pay the some or all of the difference?
The lender can ask you to repay the debt but a homeowner doesn't have to agree. That is when you tell the lender to go ahead and foreclose. They are looking to avoid foreclosure expenses.
How long will the short sale process take?
After receiving an offer on your home the banks could take about 30-60 days or possibly longer before we hear communication back regarding an approval, counter or rejection. The entire process normally takes 2-4 months but can even be longer.
Contact me to see if your situation is ideal for a short sale in Hagerstown, Frederick, Martinsburg, Charles Town or the surrounding areas.
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