We receive a lot of questions from homeowners regarding short sales. More specifically, the impact of selling your home for less than what you owe on your mortgage. Below you’ll find helpful resources and answers to some of the most frequently asked questions directly from Bank of America and Quicken Loans, two of the largest lenders.
- If you want to sell your house but it’s worth less than the amount remaining on the mortgage, a short sale may allow you to sell your house and settle your mortgage debt.
- By completing a short sale rather than allowing your house to go through foreclosure, you avoid eviction and your house won’t be sold at a public sale or auction. Plus, depending on your circumstances, you could qualify for financial assistance to help with relocation costs.
- You’ll avoid eviction; however, you’ll still need to vacate the home
- Your house will not be sold at a public sale or auction
- You may be eligible for relocation assistance
- Foreclosure process is halted with approval of a purchase offer
Myth: I won’t be able to buy another home for several years after short selling.
Truth: You may be able to buy an FHA-approved home after a short sale only if you’ve never been late on your payments and your new home is cheaper than the one you’ve just sold.
Myth: I will need to pay income taxes on the forgiven mortgage debt.
Truth: According to the Mortgage Debt Relief Act of 2007, if you’ve sold your home for less than what you owe, you won’t have to pay income taxes on the difference. (There are certain restrictions.)
Myth: My credit will be ruined if I short sell my home.
Truth: Your credit score will suffer as a result of a short sale but the impact is different for everyone.
Myth: I won’t be able to short sell my home unless I’m late on my payments.
Truth: You may still be able to short sell if there are other circumstances that prevent you from keeping your home, such as relocating for a job.
If you are interested in selling your property, but you owe more than what the property is worth you do have options! Please give us a call or email us today to learn more about how we can make your move a painless process.