Short Sale Benefits Here are a few benefits for doing a short sale that may not have occurred to you:
You are in control of the sale, not the bank. as the owner of the property you have the right to select the offer that you feel is best just like you would be able to do in a regular sale.
You will spare yourself the social stigma of the “F” word, Foreclosure.
Contrary to popular belief, you can be current on your payments and still affect a short sale.
Your home sale will be handled like any other home sale.
Can I buy again After a Short Sale? If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years. If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.
Can I buy after a Foreclosure? Yes, you can buy Again after a Foreclosure but with certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.
If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.
How does a Short Sale affect your Credit? A short sale is not a derogatory mark on your credit because credit bureaus do not show the word “short sale” on your credit report. It may say “pay as agreed” or “paid as less than agreed,” among other categories. Some clients have reported negative FICO score drops from 50 points to 100+ points.
The point drop is typically due to being in default, (that is behind on your payments). But new credit can be established and eventually a new home can be purchased.
What are the Affects on Credit after a Foreclosure? A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years. And at times results in credit cards limits being reduced and/or cancelled which can trigger a chain reaction of financial issues.
How Do Lenders report to the Credit Bureaus after a Short Sale? All lenders report short sales differently and some do not report them to the credit bureaus at all.
You may see “pay as agreed” or “paid as less than agreed” or paid in full among other categories.
What are some other affects of a Foreclosure being on my Credit Reports? After a If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record. Many fortune 500 companies won’t hire or look to transfer or terminate employees who have had or are experiencing a Foreclosure
What is a Deficiency Judgment after a Short Sale? Judgments are often negotiated between the seller and the short sale bank. In some cases, such as some cases in New Jersey which is a recourse state, meaning that the lender can pursue the balance between the final payoff amount and the amount earned after all deductions from a short sale. This is where many home owners lean towards a foreclosure; the fear of a large judgment scares them into a foreclosure which could result in an even larger judgment not to mention the financial destruction that a foreclosure will create.
Can I get a Deficiency Judgment after a Foreclosure? Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.
Loan Application Questions after a Short Sale Loan applications do not ask questions about a short sale. You may report that you sold your home.
Loan Application Questions after a Foreclosure You are required to answer the question: “Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years.” If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.
Length of Time to Move after a Short Sale If you’ve had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval varies and be take as long 2 to 3 months, but now can be done much sooner.
Length of Time to Move after a Foreclosure Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.
Taxation after a Short Sale A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions. Please note that we are not Licensed Tax experts so you should consult your Local Tax Specialist for more information.
Taxation after a Foreclosure This is the same as with a short sale; except some lenders immediately send out 1099s, even if the owner is exempt. Please note that we are not Licensed Tax experts so you should consult your Local Tax Specialist for more information.
For more information or to speak to one of our Short Sale/Pre-Foreclosure specialist please Contact Us immediately