What Is A Short Sale On Your Mortgage Loan?
Do You Know What a Short Sale Is?
It’s a hard time to be in the real estate market. Homeowners all across the country are finding themselves losing sleep and gaining stress over this entire crisis. If people are falling behind on their payments and want to get out of their debt, they can consider short selling their house if they want.
When a house undergoes a short sale, the lender accepts a loan payment that’s less that what the homeowner actually owes. Despite how it looks, it’s still cheaper than foreclosing, so a short sale can benefit the lender greatly. The money is more important to the lender than your household.
If you default ona mortgage you owe more than the back payments; there are propert inspection fees, attorney fees, late fees, all manner of additional charges to rack up the bill. Before you know it, any equity the property has is gone, and the borrower is left with nothing.
The lender can lose money as well on a foreclosure, because of the cost of court, attorneys, eviction, selling, and property maintenance can add up, all on the lender’s bill; as a result, it’s just as unfortunate for them as for you. In the end, a short sale is oftentimes the best option for both parties involved. How To Perform a Short Sale
You have to show the lender that there is no way you can pay off your loan and are in danger of foreclosure to qualify for a short sale. Once qualified, you have to get someone to buy your home at a cost that is more or less equal to its market value.
A written appraisal of the deal is then required. You must have all your financial papers prepared. Your debt will be excused only if they go for the deal you outline. If you can’t prove that you are unable to pay the loan, you can get taxed on the money you make.
Here’s some of the data you need to present:
– pay stubs and W-2 forms
– Bank account statements
– Letter outlining the financial situation the borrower is in
– Proof corroborating the events in your letter
– Property value in keeping with the market
– Agreements for listing and purchase
– Property’s proceeds form from the sale
With all of this information, the lender can then determine whether or not the sale is valid. Foreclosure will then occur if a deal is rejected. If not, the lender writes off your remaining debt and sells the property for the amount you agreed upon, no more and no less.
However, the borrower isn’t done yet. There are ways the lender has to try and get that remaining debt back from them, and could make a deal to repay it. They could attempt to collect on the shortage as well.
If this happens, you must consult an experienced real estate attorney to figure out your options. You may also have to deal with the IRS for the shortage’s income taxes. However, the lender forgiving the shortage will result in the IRS collecting taxes on it to the lender, as it is filed as income.