If you bought a home in Southern California in the last decade chances are you are underwater on your mortgage. With loan Mods having a failure rate of almost 92% many are looking for other options. Short sale maybe that option. Here are some commonly asked questions.
What is a Short Sale? A Short Sale is an agreement between the seller (property owner) and the lender whereby the lender agrees to accept less than the full amount owed in order to release the property from the existing mortgage.
What are the requirements of a Short Sale? The total loan amount must exceed the value of the property. A hardship may or may not be required (depends on the institution) and YES you can short sell an investment property.
Do I need to miss payments in order to do a short sale? Absolutely not! Due to the current market conditions some lenders are negotiating short sales even if you are current, and it may keep your credit in good standing to purchase in the near future and take advantage of low prices!
What are the tax ramifications of a short sale? Tax advice can only be given by a certified tax accountant, but usually you will receive a 1099 for the difference in what you owe and what the bank accepts. BUT there are forms you can file to ease or wipe out that tax. We do not give tax advice; you are advised to seek tax advice from your CPA.
What is the benefit of a short sale vs. a foreclosure? In most cases a short sale looks similar to a charged off credit card- balance shows zero with terms paid less than agreed upon. Some lenders will allow you to purchase a home in as little as one year after the close of your short sale. Usually it affects your score less than a foreclosure. One bank I know will not allow you to purchase for 7 years after foreclosure.
What do Short Sale Specialists do? Short Sale Specialists will work with the Seller in developing financial statements, hardship letters, and other information that may be requested by the lender. Then we negotiate with the lender to obtain the lowest possible mortgage payoff. The best part is our services are free to the seller!
How do I get started? Contact the team at Allison James Estates & Homes Elite at (888) 778-5141 to schedule a consultation.