Short Sale: 10 Facts Bradenton Homeowners Absolutely Must Know
Negotiating a short sale between the borrower and the lender takes skill, patience, and expertise. Everyone involved in the transaction needs to know what to expect. This is one of a series of articles to help Bradenton – Sarasota, Florida homeowners understand short sales. It may help you as well. Here’s What Bradenton – Sarasota, Florida Sellers Need to Know about Short Sales:
Your credit rating will drop after a short sale, but not as much as with a foreclosure. I have seen estimates of a drop of 80-100 points off one’s FICO score. That kind of drop is far less damaging than what a foreclosure does to one’s credit score. They will receive a 1099 for forgiven debt and will owe taxes on the amount. That may change. At the time of this writing there is a bill before the Senate that, if passed, will eliminate the taxed owed on this type of forgiven debt. If the Seller meets the IRS definition of insolvency, (debts exceed assets), they will not have to pay taxes on the forgiven debt. I am not giving you tax advice, that’s not my expertise. I am encouraging you to talk with a competent tax accountant about how a short sale may affect your tax situation. The lender may ask the seller to sign a promissory note for all or part of the forgiven debt as a condition to the short sale. This could be attached to other assets if the note is not paid when due. This may be rare, but it has been known to happen. Remember, everything is negotiable. The US House of Representatives has passed the Mortgage Cancellation Tax Relief Act (H.R. 1876), which would eliminate taxes on any forgiven debt on a principal residence through a short sale or foreclosure. Chances of getting a mortgage during the next 12 months are almost zero. However, if you have paid all your other bills on time, your credit score will probably improve rather quickly. The short sale process may take months. This is no quick process. It can easily take three to four months at least. Buyers may not have the patience to wait for the lender’s approval and may back out. This is a risk the seller takes when a contract is signed. It is advisable to make sure the buyer understands the short sale process and is willing to hang in there for the time it takes. All commissions, expenses, fees, and closing costs can be wrapped into the short sale so the seller has no money out of pocket. There is NO COST associated with the short sale for the seller.
The more you know about short sales, the better decision you can make regarding your financial future. Pick up the phone and give me a call if I may be of help.
By: Dan Forbes
About the Author:
Dan Forbes is the broker/owner of Premier Team Inc., Realtors, in Bradenton, Florida. He has assisted over 1000 Bradenton, Florida real estate buyers, sellers, and investors. He is also president of the Bradenton Real Estate Club. BradentonFloridaRealEstate.com and TheRealEstateZoo.com [http://www.TheRealEstateZoo.com] Dan is an author, speaker, and seminar leader as well as an active Realtor working with Buyers and Sellers.
Categories: Short Sale Tags: Debts, Tax Accountant, Us House Of Representatives
What Are the Ramifications of Foreclosure?
Ramifications of foreclosure
Foreclosure could be avoided by several solutions. There are lot of options for you to prevent it. But if you are not able to avoid it, you must know the ramifications of foreclosure. You need to understand that the credit score is going to get reduced by more than 200 points. This will affect your future chances of getting the loans. Most lenders would not want to give loans to people with bad credit. The interest rate will always be higher if you tend to have a poor credit rating. Moreover,you will be needed to show the lender that you have had foreclosure in the past. Some people prefer to use the short sale rather than the foreclosure. The short sale has less negative ramifications than the foreclosure. The cost associated with the foreclosure will also be high. Lenders actually prefer the short sale over the foreclosure.
Other foreclosure ramifications:
The foreclosure will remain in the credit report for a long time. It would be there for at least seven years. You need to take every action possible to improve the credit score. One solution for you to keep the credit score high is to pay all the other debts. Make sure that you are not making late payments. As I said earlier, it is always better to avoid the foreclosure. You must never be hesitant to talk with the lender. You can give every honest reason and can get a forbearance to prevent foreclosure. The lenders will be ready to give maximum support to avoid the foreclosure.
Stop Foreclosure – Save Your Credit
Categories: Help With Foreclosure Tags: Debts, Forbearance, Maximum Support
