Now a days every body is talking about short sale, even President Obama is talking about short sale and you can find lots of information on the internet, some are good information and some are not so people get confused which one is the right information.
Of course, the better option is to find some way to stay in the house if you can by contacting the lender to modify the loan so that you can comfortably afford the payment. Apparently, more and more lenders are willing to make adjustments so that the homeowner can stay in their house.
But, if loan modification doesn’t work out then look for the option of short sale so that you can avoid foreclosure. Before considering short sale, check with your CPA or attorney for any tax ramifications or any new laws for your state since I’m not an attorney or CPA.
Here are the points on how short sale will help you:
1. In short sale, at least you have the ability to negotiate with the lender to settle the amount or release from all the liabilities.
2. Even though, it will affect your credit but not as foreclosure and you can rebuilt your credit faster than foreclosure. In short sale, your credit scores hit 80-150 and in foreclosure somewhere 300 point reduction.
3. In short sale, your credit score will be affected for 18-24 months rather than 5-7 years in foreclosure.
4. According to Fannie Mae guidelines, after a successful short sale, they can qualify for a home loan after 2 years but if it’s a foreclosure, then waiting period is 3 years.
5. According to Mortgage Forgiveness Debt Relief Act of 2007, you don’t have to pay any taxes on the forgiven amount whoever is selling (primary residence) until 2012.
As always, don’t hesitate to call me with any questions. You can reach me at (510) 366-9405.
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