Do You Owe More Than Your Home is Worth?
Is a Short Sale Right for you?
Get the Facts. Don’t Make the Biggest Financial Mistake of Your Life!
If you are upside down on your mortgage (owe more than the value of your home) and can’t make your mortgage payment (because of job loss, divorce or an adjustable rate increase), the only option, up until now, was allowing your banks to foreclose. Please understand that a foreclosure is an option of LAST resort. A foreclosure stays with an individual for seven years or more. A better option than a foreclosure for you is the “short refinance” or a “short sale.”
If your bank will agree to a short refinance, this is a great option. If your bank will not allow a short refinance, you can can short sale your home for you. In either case, YOU avoid foreclosure and WIN by leaving you without further debt and the stain of a foreclosure on your credit report.
A short refinance is when your bank agrees to discount your mortgage loan because of your economic or financial hardship. Even if you have already received your Notice of Default, you still have time if you hurry.
A short sale is a sale of your house below the mortgage value with the BANK taking the loss for the remaining balance rather than you. Banks are regularly accepting short sales and the losses arising from short sales. YOU are the WINNER, and the BANK is the LOSER. A short sale is much better for your credit than a foreclosure and you can start over without the burden of your current mortgage. A short sale is reported as a “settlement of the debt” on a credit report, whereas a foreclosure is reported as “non-payment of a debt” on your credit report. With a foreclosure, a borrower often waits seven years to buy again. With a short sale, you can fix your credit as soon as 24 months. In today’s real estate market, short sales are often overlooked by new lenders because they are common effects of the housing bubble started by Wall Street. Foreclosures, on the other hand, are always negative events.
Note that the debt forgiven by your bank will be considered income for you and is liable to taxation. The Mortgage Forgiveness Debt Relief Act, however, ELIMINATES such tax liability if you act quickly. A short sale is a sound business decision.
Red tape and a load of paperwork is very common in short sales, requiring potentially multiple levels of approvals and conditions. Junior liens – such as second mortgages and HOA’s – may need to approve the short sale. Act now before it is too late.
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