3 things sellers must know about Short sales.
Underwater on your mortgage? A short sale may be an option, but you first have to convince the bank to erase part of your debt – and your credit will still suffer.
1. You have to prove hardship.
To get the lender to forgive the balance of your mortgage, you’ll have to prove that you can’t make payments or must move and can’t pay off the full loan. You will need to give the bank recent W-2s, bank statements and tax returns, so be sure to have the necessary documentation on hand.
2. Your credit will take a hit.
If the shortfall is forgiven, it won’t hurt your credit as much as a foreclosure. But you’ll still be hard-pressed to find another lender willing to give you a mortgage anytime soon. In rare cases, you’ll be required to repay part or all of the funds; fail to do so, and you run the risk of being sued.
3. You may owe taxes on the debt.
Thanks to a 2007 bill, you won’t owe taxes on the amount forgiven if you’re selling your primary home. But if it’s a vacation home or investment property, you will have to prove to the IRS that you’re insolvent (that your total liabilities exceed your total assets), or cough up the money.
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
One Response to “3 things sellers must know about Short sales.”
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