The Home Buyer's Korner

Information presented should be used for educational purposes only.

January 16th, 2014

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Short Sales & The Seller’s Perspective

Avoid Foreclosure & Tax Implications

Know When You Can Get This Chapter Behind You

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For sellers that are in financial stress with the possibility of losing their homes a “short sale” is a possible solution. 

Perhaps you have been told that the house should have the carpet replaced or that the interior needs painting or worse that the roof looks like it should have been replaced years ago.  If you’re caught in a Catch-22 situation of needing to sell and don’t have the money to put into the house, there’s a possible solution called the FHA-203k Streamline Home Mortgage Loan

If this is your situation, contact one of the real estate professionals in our network to learn how to start the short sale process with your lender and get your home sold, so you can start a new day.

Once you have the lender’s approval to market you home, your agent can do the following to get it sold:

  1. Market your house as being eligible for FHA-203K financing;
  2. Locate a licensed contractor that’s experienced with the FHA-203K program and get a written repair estimate;
  3. Have your real estate agent provide the repair estimate along with this information to the lender an their intent to market your home as an eligible FHA 203K property with your listing MLS information;
  4. Have copies of the estimate inside the house for would-be home buyers and their real estate agents to take with them;
  5. Have your real estate agent list experienced FHA 203K lenders in our network and refer interested home buyers to learn more about this great home renovation loan program.

Bad Things Happen to Good People

FHA RECENTLY REMOVED ITS MINIMUM TIMELINES

TO PURCHASE A HOME IF YOUR HAD A RECENT FINANCIAL HARDSHIP

BACK TO WORK ~ EXTENUATION CIRCUMSTANCE

Once you’ve settle on your short sale, home ownership is still within your reach with an FHA insured mortgage after just 12 months if:

  1. As of the date you make application for you new home, all installment debt payments were made within the month due for the twelve months preceding the short sale.

  2. If you were in default at the time of the short sale (or pre-foreclosure sale) you’ll be eligible for and FHA insured mortgage after three years from the date of the short sale.  (THE THREE YEAR REQUIREMENT HAS RECENTLY BEEN REMOVED BY HUD).

  3. If you sold your property under the FHA pre-foreclosure sale program you are eligible (REMOVED) three years from the date that FHA paid the claim associated with the pre-foreclosure sale.  Make sure to keep a copy of your Note.  This document will have an FHA Case number and your lender can check with HUD to determine when the claim was paid.

  4. Lenders may make exceptions for borrowers in default at the time of short sale if the default was due to circumstances beyond the borrower’s control (such as death of a primary wage earner, long term uninsured illness, etc.); and your credit report reflects satisfactory credit prior to the circumstances that caused the default. Make sure you keep good records so you can document all your actions during this time! 

  5. Applicants who pursued a short sale agreement on their principal residence to take advantage of declining market conditions and purchase a similar or superior property within a reasonable commuting distance will not be eligible for a new FHA insured mortgage under the reduced timelines.
  6. Income Tax Implication may currently exist for all short sales after Dec 31, 2013.  With the change in IRS rules it’s important to know where you stand in the event of a short sale after Dec. 31, 2013. Here’s what Turbo Tax tells us. 

    Since a deficiency judgement is popular again, especially now that the original tax break has expired, short sellers face the possibility of lenders chasing them for the deficiency. Make sure your current lender clearly states in writing they won’t be seeking a deficiency. If you can dodge that bullet, short sellers may have to deal with the Feds coming for taxes on that deficiency unless you meet the new IRS rules. If that happens you won’t be eligible for the shorter timelines to get a new mortgage and your tax lien is satisfied. While it seems obvious that any distressed owner considering a short sale should seek legal counsel, many don’t. DONT BE ONE OF THEM!

    HOME OWNERSHIP TOOLS

    FHA 203K

    Your Home Purchasing or Refinancing & Renovation Tool

    Mortgage Loan Officers, Real Estate Agents & General Contractors

    are ready to assist you with your home purchase

    FANNIE MAE HOMESTYLE

    The Conventional Alternative to FHA 203K

    Great for Real Estate Investors and Second Home Renovations

    You Mortgage Loan Officer, Real Estate Agents & General Contractors

    are ready to assist you with your home purchase

    FANNIE MAE HOMEPATH RENOVATIONS

    Rebuilding the Dream of Home Ownership

    Fannie Mae HomePath has No Mortgage Insurance up to 95% LTV

    Up to $35K for Home Improvements, Renovations or a Simple Remodel

    Your Mortgage Loan Officer, Real Estate Agents & General Contractors

    are ready to assist you with your home purchase

    USDA RURAL DEVELOPMENT

    Up to $10K for Home Improvements, Renovations or a Simple Remodel

    Your Mortgage Loan Officer, Real Estate Agents & General Contractors

    are ready to assist you with your home purchase

    A SIMPLE HOME SHOPPING INSPECTION TOOL

    Organizing your home shopping experience affords a wise decision making process.

    This simple home inspection tool makes your ultimate buying decision a smart one.

    To print this document click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen you will have the option to “Create A Printable PDF of the Presentation”.

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