I spend a small part of each and every day answering questions that come through my email inbox about short sales. Over and over, I see many common questions. Seems that inquiring minds want to know the answers to all of the same things. Here’s my top five:
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1. How will a short sale affect credit?
Depending upon how the short sale is negotiated, the agreement made at the bank and the way the bank reports the short sale to the credit-reporting agencies, it is possible that the short sale could have only a small impact on credit score. However, the missed mortgage payments (if there are any) will have a negative impact on credit.
2. What are the tax consequences of a short sale?
Short sale sellers should always consult with an accountant regarding the possible tax consequences of a short sale. President Bush did sign into law the Mortgage Debt Relief Act of 2007, which does have positive tax consequences for those who participate in the short sale of an owner-occupied property.
3. Why is a short sale better than a foreclosure?
When a seller participates in a short sale, s/he will avoid the foreclosure ‘ding’ on the credit report. That being said, it may not be better to participate in a short sale. Consult an attorney and/or an accountant to help decide what is best for you.
4. Can a person participate in a short sale if they have no late mortgage payments
The simple answer is ‘yes.’ If an individual has a verifiable hardship, then they can participate in a short sale.
5. My seller’s foreclosure date is 2 weeks away. Can he still participate in a short sale?
Many lenders will postpone a foreclosure date if they have a complete short sale package from the seller and the seller’s agent. This package must include a purchase contract as well as important financial information. Without these items, lenders will not postpone a foreclosure date.
So, there you have it. Top five short sale questions so far this summer are answered for you here. Now, go out and enjoy your summer!
Photo: flickr creative commons by Ishmael Orendain