Does the idea of a short-sale leave you with more questions than answers?
You're not alone! But a short sale is nothing new, and it's not just a product of the current housing crisis. It’s an exit strategy that has been around for years, offering Sellers relief and release from the challenges of a property they can no longer afford. Less invasive than a foreclosure and less destructive than bankruptcy, a Short Sale involves selling your property to a qualified buyer for less than what’s owed to your lender.
A Home Encounter sales consultant can take you through the short sale process from start to finish. Our teams of experienced short-sale negotiators will help you get your under-valued, over-mortgaged property off your hands in the shortest time possible. Here are a few frequently asked questions to get you started. If you have a question that's not shown here, contact a short sale specialist by calling 813.600.5090.
How Do I Know If I Need to Short Sale My Home?
A short sale could apply to you if you owe more than what you paid for your home. But whether or not you need to short sale depends on your personal financial picture. Today in America, over 45% of homeowners are in the unfortunate position of being "underwater", but not all of them will choose a short sale. The reasons range from the fact that they love their homes; they're only slightly underwater; they can afford to continue to pay their mortgage at it's current level; they believe that the housing market will recover to the price they paid for their home, and reasons like these.
I'm Definitely Underwater and I've Fallen Behind On MyMortgage Payments. What Should I Do?
It might be time for you to consider a short sale. Contact a Home Encounter Consultant at 813.600.5090 and we'll advise you of your rights and responsibilities as well as your choices under the law. Don't ignore it, because it won't go away. Talk with a short sale expert and discuss your options.
Will A Short Sale Hurt My Credit?
Definitely, yes. Under most circumstances, a short sale will have an impact on your credit for 2 years. That means during this time you won't be able to buy another home using your credit; you may not qualify for auto financing; your consumer credit cards may be closed.
Can I Short Sale My Home Without Falling Behind On My Payments?
You can certainly try, but if you're making your payments, you may not be perceived by your lender as truly being in a hard-ship position. Remember, a short sale isn't supposed to be an easy-out from falling home prices; it's intended to provide relief to home owners who can't make their payments. So if you just want out of a house and you're not behind on your payments, you may not need a short sale - at least not in the eyes of your lender.
How Long Will A Short Sale Take?
The average short sale has been on the market for 298 days! So you should anticipate the better part of one year to get your home completely short-sold. But when you use Home Encounter to negotiate your short sale, the actual negotiation process takes about 90 days from the time we submit a complete short-sale package to the lender. The reason that most short sales take almost a year is because some homes take lots of time to attract offers, and most short-sale agents are inexperienced. Trust an experienced short sale agent to expedite your short sale process and short-sale your house in a below average time-frame.
Why Doesn't Mortgage Insurance Cover A Deficiency Judgement in The Case of a Short Sale?
Usually your mortgage insurance only covers your deficiency up to a certain dollar amount. Anything over this amount and your mortgage insurance carrier will insist that you are judged for the deficiency. Your lender will try to collect this deficiency from you before they file a claim with the mortgage insurance company. Ultimately, the mortgage insurance is not there for your protection, just the lender's.
Are Second Mortgages Automatically Forgiven?
No. Your lender will not automatically forgive debt unless it is explicitly stated in writing.
Can My Wages Be Garnished in The Case of a Deficiency Judgement?
Worst case scenario, your wages can be garnished. But it is not common.
Will I Have To Pay Income Tax On Forgiven Debt?
You will have to pay extra income tax if the bank sends you a 1099 for the deficiency, unless you can show that you're insolvent. Talk with your tax accountant and see if insolvency will protect you from having to pay income tax on forgiven debt.
How Does Home Encounter Profit From a Short Sale?
When formally requesting a short sale commitment from the bank, our commissions are usually included. This is paid by the bank in the course of the short-sale and does not come directly out of your pocket.
Will I be Able to Get Financing In The Future If I Go Through A Short Sale?
It all depends on the arrangement between you and the lender. If you pay them a promissory note for the deficiency, then the damage to your credit will be minimal and you shouldn't have a problem obtaining loans in the future. If the lender shows "settled for less than the amount due" on your mortgage tradeline, some future lenders will look at that as a foreclosure. Generally, when you get a new mortgage, as long as you don't have a foreclosure, bankruptcy, or unsatisfied judgment, your ability to qualify will be the same as it is now (and your credit score needs to stay the same).