Do you still owe money on a short sale?
Do you still owe money on a short sale?
If the amount the mortgage company receives from the sale is less than the mortgage debt owed, depending on state laws, the homeowner may have a deficiency judgment. In other words, the now-former homeowner may still owe money on the home loan. Foreclosures are less common than short sales.
How does a short sale work in real estate?
A short sale process starts off like any other home sale: You contact a real estate agent (here’s how to find a real estate agent in your area), list your home (mentioning that it’s a “short sale/subject to lender”), then wait for an offer to come in. But once you accept an offer, things get tricky.
Can a short sale be used to avoid foreclosure?
Short sales are an option for homeowners who are underwater on their mortgage to sell their property, and to avoid going into foreclosure. For many distressed homeowners, short sales are an alternative to foreclosure. Here are the steps sellers need to take in order to sell their properties in short sales:
How to get a mortgage for a short sale?
Get pre-approved for a mortgage: Buying a short sale property begins the same way as buying any other home: get pre-approved by a lender. They will tell you how much you can afford, how much cash you need, and what your monthly costs will be.
How does a short sale work for real estate?
Many short sales result in huge discounts for first time homebuyers, real estate investor, and flippers, which puts them in a position to gain instant equity and to start making money right from the moment they take over the property.
Can a bank still owe money after a short sale?
Many homeowners are surprised when they find out they can still owe money to the bank after a real estate short sale if the agreed upon price was payment of the loan in full.
Can a short sale be declared as income?
The best short sales will be ones where the bank accepts payment in full without pursuing a deficiency judgment. The difference between the mortgage balance and the short sale may be declared as income on their income tax return by means of an IRS form 1099.
When do you get a 1099 for a short sale?
The 1099 form is given to the homeowners as a result of income they’ve received on paper as a result of a short sale. In situations where the bank accepts a $50,000 sale on a $100,000 mortgage, it is the same as if the sellers had actually made $50,000 on the deal and the 1099 will reflect that amount.
If the amount the mortgage company receives from the sale is less than the mortgage debt owed, depending on state laws, the homeowner may have a deficiency judgment. In other words, the now-former homeowner may still owe money on the home loan. Foreclosures are less common than short sales.
How does a short sale of a house work?
Lenders approve the sale of the property: The lenders will review the buyer’s offer and decide if they will approve the sale. Once approved by the lenders, the short sale can close as soon as the buyer can get their loan approved, funded and closed.
Get pre-approved for a mortgage: Buying a short sale property begins the same way as buying any other home: get pre-approved by a lender. They will tell you how much you can afford, how much cash you need, and what your monthly costs will be.
What should I look for in a short sale?
Shop for properties: If you find a short sale property that you want to purchase, you must work with your real estate agent to identify how much the seller owes, how many loans they have, and whether they’ve been approved by their lender (s) for a short sale.