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Short sale Chicago, pay $0 to a Realtor, an attorney, and the lender for selling your house short. “Short sale” transaction requires professionals that specialize in loss mitigation to get involved in. For free, confidential, and no obligation consultation regarding selling your house short call me at 224-800-4731 or email me at [email protected] There is no cost to you as a seller for selling your home short. The bank that you got your mortgage from will cover all the costs associated with selling your home short except an attorney fee that I will cover for you when the transaction closes.
Below you will find some general information regarding “short sale”
Short sale or “Selling property short” means that the balance of a debt against the property exceeds the selling price. For example: property owner has a balance of $200,000 on an existing mortgage. The house in the current market is worth and it will sell for only $150,000. In this case the proceeds from selling this property will fall short of $50,000.
The Mortgage Forgiveness Debt Relief Act
On December 18, 2015, President Obama signed a bill that extended the Mortgage Forgiveness Debt Relief Act through December 31, 2016. The Mortgage Forgiveness Debt Relief Act prevents homeowners who went through a short sale from being taxed on the amount of their home mortgage debt that had been forgiven. Normally, debt that has been forgiven by a lender counts as taxable income.
Originally enacted in 2007, the Mortgage Forgiveness Debt Relief Act allows debt forgiveness of up to $2 million to NOT be considered taxable income if:
The house has been used as the principal place of residence for at least two of the previous five years.
The debt has been used to buy, build, or make substantial improvements to the home.
Obviously, this is a huge relief to owners of distressed properties who are already facing financial burdens, and it eases many of the concerns they may have had about moving forward with a short sale.
Why owners sell their homes on a Short Sale?
Short sale is many times used as an alternative to foreclosure for a few different reasons. Number one reason it mitigates additional costs both to the lender and borrower which means that the lender most likely lose less money on a short sale than going through the whole process of foreclosing on a property. On the other hand borrower usually does not pay any costs associated with selling the property except attorney’s fees and his credit is usually less damaged than when property is foreclosed.
How can I find out if I qualify for a short sale?
Both national and state laws for real estate and lending are changing on an ongoing bases. Those borrowers who are interested in pursuing a short sale should be looking for a specific advice as it applies to their situation. The best source for obtaining up-to-date information would be from professionals that specialize in loss mitigation and are licensed to practice in the state where the property is located. Speaking to an accountant, an attorney, and real estate broker that specialize in a short sale is the best way to begin. Everybody’s situation is different (some are very complex) and you should not make any assumptions until you go through the process with the professionals that can help you to find out if you qualify for a short sale.
It is important for every home owner who wants to pursue a short sale to consult an accountant or tax attorney to find out if there will be any tax implications for that particular owner. Since a successful short-sale will ultimately reduce the debt of a homeowner, the IRS considers the reduction of debt as income which may result in certain tax implications.
Will I be able to buy a new house after I sell mine on a Short sale?
On August 15, 2013, the Federal Housing Administration came up with a new program “Back-To-Work-Extenuating Circumstances”. This program can assist borrowers who faced financial hardship during recession. It provides second chance for those who experienced financial hardship beyond the borrower’s control. This program is designed to help borrowers with recent history of short sale, loan modification, judgment, and foreclosure. Those borrowers who experienced financial hardship and can document it that it was out of their control, that they have recovered, and they have completed housing counseling can apply for FHA insured mortgage that will allow up to 96.5% financing.
To get back on track after a short sale homeowners should take the following steps:
1. Get the letter from their lender that the loan closed in a short sale, not a foreclosure.
2. Order a copy of their credit report from all three credit bureaus.
3. Get pre-approved.
The lender will check current guidelines to check if borrower will be qualified to get a mortgage. Short sale Chicago for many buyers allows to purchase homes at discounted price.
Because banks change the rules from time to time regarding “short sale” qualifications and everything that goes along with this process, it is good to check with an attorney who specialize in this type of transactions to make sure you have correct information up to date.