When an owner can longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure. One of those options is called a short sale.
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
A local real estate attorney should be consulted to determine whether the loan qualifies for a deficiency judgment or claim, as state laws vary. One should also consult an accountant to determine tax ramifications. The IRS may consider debt forgiveness as income. There is no guarantee that the lender will not legally pursuer a borrower for the difference between the amounts owed and the amount paid. This depends on individual state laws.
Also, see your accountant -the IRS may count debt forgiveness as considerable income, be wary of the tax ramifications involved. Another good reason to consult your lawyer is that the lender may still legally pursue you for the unpaid debt.
It's hard to guess how long securing a short sale will take, but it's sure to be long, tedious, and tiring. Lenders usually say about 21 days or so for a case to be completely approved.
Not just for nonpayers, those who have never once paid a single installment can also avail -thanks in part to their negative equity. To short sell is to get out of a very rough and highly threatening financial situation, take it when you need it and take it if you can.
The process: The contract, authorization to release, and the addendum -these are the key parts of the whole short sale process, topped off with the warranty deed. Here we'll take a closer look at the contract and the addendum:
The Contract: The contract can be of any variety-a one page, a nine page, a board of realtors' version, or any generic type of purchase and sales contract. However, at any point in the contract in which price is mentioned, you should fill in the phrase: "See Addendum."
The Addendum
Addendum: Perhaps the most important document in the process, the addendum contains the basic and vital information regarding the property and the transaction:
Origination of the contract
The Date
Names of the parties involved
The address
Tip: It's best to use both the simple address and the legal address.
Any good investor should be aware that a short sale is a good way to peruse quality bargain real property -a case in which a short sale is actually more financially reasonable than outright foreclosure.
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
A local real estate attorney should be consulted to determine whether the loan qualifies for a deficiency judgment or claim, as state laws vary. One should also consult an accountant to determine tax ramifications. The IRS may consider debt forgiveness as income. There is no guarantee that the lender will not legally pursuer a borrower for the difference between the amounts owed and the amount paid. This depends on individual state laws.
Also, see your accountant -the IRS may count debt forgiveness as considerable income, be wary of the tax ramifications involved. Another good reason to consult your lawyer is that the lender may still legally pursue you for the unpaid debt.
It's hard to guess how long securing a short sale will take, but it's sure to be long, tedious, and tiring. Lenders usually say about 21 days or so for a case to be completely approved.
Not just for nonpayers, those who have never once paid a single installment can also avail -thanks in part to their negative equity. To short sell is to get out of a very rough and highly threatening financial situation, take it when you need it and take it if you can.
The process: The contract, authorization to release, and the addendum -these are the key parts of the whole short sale process, topped off with the warranty deed. Here we'll take a closer look at the contract and the addendum:
The Contract: The contract can be of any variety-a one page, a nine page, a board of realtors' version, or any generic type of purchase and sales contract. However, at any point in the contract in which price is mentioned, you should fill in the phrase: "See Addendum."
The Addendum
Addendum: Perhaps the most important document in the process, the addendum contains the basic and vital information regarding the property and the transaction:
Origination of the contract
The Date
Names of the parties involved
The address
Tip: It's best to use both the simple address and the legal address.
Any good investor should be aware that a short sale is a good way to peruse quality bargain real property -a case in which a short sale is actually more financially reasonable than outright foreclosure.
About the Author:
Know about short sale an alternatives to bankruptcy or foreclosure only at Don Burnham's website http://www.weknowthewayback.com. Visit today to know all about short sale!
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