Common Short Sale Questions
- How much time do I have? Do I have to start now?
It is best to start your Short Sale when you realize you can’t afford to make your payments. The earlier you start, the higher our likelihood of success. Remember that your lender requires a purchase offer to review your short sale package and it will take time to get a solid offer.
- Do I need to be in default to qualify for a short sale?
More and more lenders are considering short sale requests from homeowners who are not in default. However, you must be experiencing a financial hardship that points to imminent default if you are unable to sell.
- What will happen if I do nothing and just walk away?
If you do nothing and are not making your mortgage payments, your lender will foreclose. You will have a foreclosure on your credit report, be liable for any deficiency and/or subject to a taxable event.
- Will I get any money when the property sells?
For the majority of loan types, you are not allowed by your lender to receive any proceeds from the sale of your home on a Short Sale. However, the rules are ever-changing. Also, remember that you are asking your lender to forgive you of your debt. The fact that they may release you of your obligation can be an enormous benefit to you.
- What if I file bankruptcy?
Filing bankruptcy will delay the foreclosure process. The property will eventually be discharged from bankruptcy protection and be back in the foreclosure process, where it was when bankruptcy was filed.
- What is better on my credit – Foreclosure or Short Sale?
A short sale will most commonly be listed as “settled debt” and is much less harmful to your credit
- What should I know about the forgiven debt?
Whenever $600 or more is forgiven as a result of settling a debt for less than the balance owed, the creditor may be required to report the amount forgiven to the IRS on a 1099C form, a copy of which should be mailed to you by the creditor. If you are uncertain of the legal or tax consequences, please consult your legal or tax adviser.
NMLS No. 847754