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Real Estate Short Sale Questions and Answers |
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Question: Please Help!! Equity Line Short Sale Property Tax Question?
Okay - I bought a home 3 years ago on an ARM. I have since refinanced to a loan and have a 1st mortgage that is interest only fixed until 2013 at 6.25% and an equity line that is adjustable at about 9%. I currently rent the home and that covers the mortgage payments entirely, but does not give me enough $$ to cover taxes and insurance, which are together about $9,000 a year. I don't have an extra $9,000, so I've been paying the taxes out of my equity line. I now owe close to or just over what the home is worth...I have about 60k left on the equity line, but I'm scared to keep using it to pay for taxes and repairs. The home is has 3 units and is in a college town 3 blocks from the beach, so it's a great investment, but I'm thinking I might have to short sell it even though I've never missed a payment...I can't afford the taxes! Do I stick it out until 2013 and hope that my equity will have exceeded the money I used on the equity line for taxes, or should I short sell it now?
Actually, I have 30k left on my equity line, not 60k. Thank you to everyone for advice!Answer: Sell immediately. If an investment property doesn't ...
Sell immediately. If an investment property doesn't cover all costs, including taxes, and leave you a 15% profit on your down payment, it is a poor investment. Bite the bullet, lick your wounds, and sell.Answer: It doesn't sound like a great investment if you ...
It doesn't sound like a great investment if you can't even rent it for a high enough fee to cover the mortgage.
YES, you need to sell the home, before you back yourself up into a foreclosure situation, which is EXACTLY where you are headed.
When you couldn't rent it to cover ALL of the expenses, PLUS a positive cash flow...that should have told you right there that you couldn't afford to keep the house and needed to sell.Answer: That property is an alligator that is eating you alive. You ...
That property is an alligator that is eating you alive. You won't get a lender to agree to a short sale, inopinion, but you can try. Dump that thing even if you have to pay someone to take it.Question: Short Sales for Buyers: What are the standard procedures of a short sale transaction in real estate?
I've recently made an offer on a short sale property. This stuff is totally new to me and I'm receiving a bunch of advice that all seems to contradict each other. So really I have a few questions:
-How does the realtor get paid their commission (I'm working with a dual agent representing both parties)?
-What party (buyer or seller) has the right to choose the title agency to run the title work in a short sale?
-What "outs" do I have as the process is pending?
-Are there any good informational links where I could read more about the process (especially for Florida)?
I've consulted a lawyer, realtor, and websites and have just gotten more confused in the process. Thanks so much for your help!Answer: 1st -- the realtor isn't representing both parties, ...
1st -- the realtor isn't representing both parties, s/he's representing whomever will be paying his bill. likely the bank, since it is a short sale. NEVER believe the person is representing you unless you've paid cash for that service and there is no conflict of interest.
2. -- whomever pays for the title search chooses the agency. if the terms of your offer say you're paying, you choose. if the bank is paying, they choose.
3. outs. only whatever you wrote into the purchase offer. if you made no conditions in your offer, you have no outs other than those specified by Florida law. [it is online, google will find it -- example: termite inspection/treatment]. and even then, a national bank or US agency [resolution trust co did this] might argue that US law trumps FL law and the Florida safeguards do not have to be followed -- so write them into your offers.Answer: Parts of this are very simple. You will make an offer and ...
Parts of this are very simple. You will make an offer and the seller can accept, reject, or counter that offer. If accepted, you're not done yet. The bank will have to approve the short sale before you're totally under contract.
- The agent will get paid a commission from the Seller. This amount will come out of the amount the bank will be getting at closing, so it truly comes from the bank, and must be approved by the bank. As for the Realtor representing both parties, in Colorado there is no such thing as dual agency, there is transaction brokerage. This is where the Realtor does not represent either side, but actually represents the deal so it is done correctly for both parties. No advice is given, no confidential information from either side is given, either.
- The title company is chosen by the Buyer in all transactions. Here's the catch, though. If you would like a different Title Company from the one the Seller has chosen, you will have to pay the title insurance yourself.
- The "outs" you have are all in the contract, and include the inspection notice, appraisal provision, and the survey provision. There are more, also, but you would need to refer to the contract itself. Remember that the property will be more than likely purchased "as-is" so asking for something to be fixed probably won't work. But, you will be able to cancel out of the contract if you find that there's much more work than you're willing to do.
- I would ask the Realtor for the Florida Real Estate Commission's website and see what you can read there to help you further with short sale information. There should be a ton of good articles for you to read.
Best of luck to you!Question: What bill did George Bush sign about helping homeowners with short sales avoid a 1099?
A few weeks ago I heard about President Bush signing something to help homeowners avoid paying taxes on their short sales. Banks would issue a 1099 when a short sale was approved, and be taxed on their short sale savings. I need a link to read about that story, please. Thank you !!Answer: I don't know, I bet he only sing one for his family, ...
I don't know, I bet he only sing one for his family, because he's selfish and mean.Answer: heres an article about it :)
heres an article about it :)Answer: http://www.govtrack.us/congress/bill.xpd?bill=h110-3648&tab= ...
http://www.govtrack.us/congress/bill.xpd?bill=h110-3648&tab=summary
To amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.
Highlights from Project Vote Smart
The following is Project Vote Smart's highlights for this bill, graciously made available by PVS:
- Excludes the debt forgiven on a qualified principal residence from the definition of gross income subject to income tax (Sec. 2).
- Reduces the income tax breaks on most gains from the sales of non-primary residences using a formula based on the amount of time that the taxpayer actually lived in the property during the five-year period before the sale (Sec. 5).
Congressional Research Service Summary
The following summary is provided by the Congressional Research Service, which is a nonpartisan government entity that serves Congress and is run by the Library of Congress. The summary is taken from the official website THOMAS.
10/4/2007--Passed House amended.
Mortgage Forgiveness Debt Relief Act of 2007 - Amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge of indebtedness incurred to acquire a principal residence. Limits to $2 million the excludable amount of such indebtedness. Reduces the basis of a principal residence by the amount of discharged indebtedness excluded from gross income. Disallows an exclusion for a discharge of indebtedness on account of services performed for the lender or any other factor not directly related to a decline in the value of the residence or to the financial condition of the taxpayer. Sets forth rules for determining the allowable amount of the exclusion for taxpayers with nonqualifying indebtedness and who are insolvent.
Extends through 2014 the tax deduction for mortgage insurance premiums.
Sets forth alternative tests for qualifying as a cooperative housing corporation for purposes of the tax deduction for payments to such corporations. Qualifies a corporation if: (1) 80% or more of the total square footage of the corporation's property is used or available for use by its tenant-stockholders for residential purposes, or (2) 90% of the corporation's expenditures are for the acquisition, construction, management, maintenance, or care of its property for the benefit of the tenant-stockholders.
Limits the exclusion from gross income of gain from the sale of a principal residence by denying an exclusion of the gain that is allocable to a nonqualified use of such residence (i.e., use other than as a principal residence).
Amends the Tax Increase Prevention and Reconciliation Act of 2005 to increase to 116.75% the estimated tax rate in the third quarter of 2012 for corporations with assets of not less than $1 billion.Question: How badly will a "short sale" affect my credit?
I owe a home that I am no longer living in (I was promoted and moved out of state). I absolutely cannot continue to pay both the mortgage as well as my rent in my new city. My house has declined in value by at least 50k since I purchased it in November 2005 (the house is in Florida). I don't know what to do other than a short sale but I've heard that this can affect your credit but no one can tell me how much. I have a tenant who is renting from me but the market is so bad in my area, the rent he's paying is only covering a fraction of the mortgage. Will a short sale completely ruin my credit? Are there other alternatives I can investgate?
Also....I already applied for a "loan modification" but am not hopeful that I will be approved.Answer: If you sell short, you will still owe the difference. If ...
If you sell short, you will still owe the difference. If you pay the difference then there is no problem. If you default on the loan you may not be able to get another loan or even a credit card for 12 years, and you will have to pay taxes on the difference as if it were income.
You said you got promoted and moved. check with your employer to see if they can help.
Talk to a financial planner (that charges for service and does not sell insurance) They can help you with options.Answer: If the mortgage holder agrees to a short sale, it should not ...
If the mortgage holder agrees to a short sale, it should not be detrimental to your credit rating. Technically, the sale results in paying off the mortgage. That is, the mortgage holder agrees to accept the proceeds of the sale as payment in full.
By accepting a short sale, the lender avoid a foreclosure, and the owner repays the loan for less than is owed. There is a cost to foreclosing and collecting the deficit resulting from the subsequent sale of the house may not be possible and is in any case costly.Answer: unfortunately in this market even if the bank is willing to ...
unfortunately in this market even if the bank is willing to do a short sale does not mean the place will sell, how much are they willing to short? also very hard to get a handle on what the current value of property with homes prices still in declineAnswer: You don't say how much of a short sale you need, which ...
You don't say how much of a short sale you need, which is an important aspect of the equation, because the lender will need to approve the short sale.
There are other factors also, how late payments will be involved, and the short sale will be reflected on your credit report. It is not possible to answer with accuracy how many points your score will go down, but it will be going down.Answer: As a Realtor currently working with 6 short sales, I can ...
As a Realtor currently working with 6 short sales, I can honestly say the answer is not short enough for this forum.
A true short sale is when the lender eats the difference between what you owe and what you sell for - and they may be willing to do that if your Realtor can do appropriate market comps and knows how to talk to the lender's review board.
Another alternative is a combination of selling short and assuming the remainder on a non-secured line of credit. More of the larger lending institutions are allowing this option - which does NOT ding your credit - as a means of losing less money for themselves. Again, a Realtor familiar with the rules regarding this combination is best able to help you decide which way to go.
A Short sale will affect your ability to purchase a new property at a decent interest rate for up to 3 years, depending on the amount short you are. However, option 2 means that you will be able to get a new home loan at a good rate - but you will affect the amount of property you can buy because you will still have the unsecured line of credit to pay off. A forclosure will not disappear from your credit report and should be avoided if possible
Contact several Realtors in your home's area and interview for your specific sale needs - if a Realtor has done at least 6-12 short sales or preforclosure sales and doesn't feel like a total shark, sign on right away!Answer: even if your lender would agree to a short do not plan on it ...
even if your lender would agree to a short do not plan on it selling anytime soon. In order not to damage your credit you would still need to pay the difference between what you owe and what the property finally sells for. Florida is a very easy state for a creditor to get a judgment for the difference, collecting it is another matter but will be on your credit
I was just looking at volusia county foreclosure sales this morning on the county website and the foreclosures headed for public auction this and next month its alomst impossible to believe the number of them on the list.Question: How long do I have to wait to buy another house after a short sale on previous house?
previous house was on floreclosure but sold on short sale, before final status.Answer: Most lenders look for a 12 month clean history with no late ...
Most lenders look for a 12 month clean history with no late pays on mortgages, etc. So I'd say 12 months AFTER you can manage to keep all of your credit clean and paid on time.Answer: Please make sure it was reported as short sale and not ...
Please make sure it was reported as short sale and not foreclosure. Each has different impact on your credit. One year of clean credit will help you with your fresh start.
Good luck! |
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