Over the last couple of years, a lot of things have changed in the world of short sales in Cincinnati. The short sale niche is certainly growing in importance and popularity. There are many reasons homeowners have chosen this alternative such as divorce, medical problems, job loss or other problems or circumstances that occurred in their lives.
No fees Involved
A short sale is usually used as an alternative to foreclosure mainly because it mitigates additional fees and costs for both the creditor and borrower.
Decrease effect on credit.
The negative impact on your credit score will be smaller in a short sale than in a foreclosure.
With a short sale, you may have the option to sell your home for less than the amount owed on your mortgage. By doing this, you may be released from your obligation to pay back your primary mortgage under its original terms.
How does the short sale process work?
Before listing your property for sale you should contact your mortgage lender and determine their requirements. Some lenders might require that you have already entered into a contract for selling your house, however, there is a growing trend for lenders to pre-approve short sales.
Documentation and eligibility criteria for short sales vary depending on the specific lender. Generally, you must prove that you are financially incapable of paying the loan. The lender will consider this when determining the costs of accepting the short sale versus foreclosing.
It is possible that even after you sell your home to still owe the unpaid difference, plus interest and penalties, to the lender also known as the “deficiency”.
Take into consideration your tax obligations. Many times there can be a substantial tax obligation after a short sale has occurred. A short sale in which the debt is forgiven is considered a relief of debt and may be accounted as income for tax purposes. The debt is calculated as the difference between the mortgage balance and the selling price. Not only does the lender have a reporting obligation, but the borrower is also obliged to report this liability on their tax return for that year. Failure to do so can lead to repercussions: a 25% underreporting penalty and an increased audit period.
Until recently, a seller had to field offers on a property and then check with the lender, who could approve or turn down the offers. Through the Home Affordable Foreclosure Alternatives, or HAFA, program that has been set in place by the federal government in 2010, the seller has a little more help with the short sale process.
The HAFA program was put together to give homeowners the opportunity not to go into foreclosure. If your house sale closes as a HAFA transaction, you will entirely be forgiven of the debt including the deficiency that lingers after the debt. In this case, the mortgage lender will not be able to take any legal action against the outstanding mortgage debt.
As part of the negotiation process, you could ask that the lender not report adverse credit to the credit reporting agencies however the lender is under no obligation to accommodate this request.
As you can see the short sales terms keep developing and they are filled with distinct impediments. It can be a difficult process however if you are correctly informed selling your house can go smoothly.
Sell to a Cincinnati home cash buyer
If your home has equity an Cincinnati cash home buyer could help you avoid a short sale altogether but in cases where your loan is upside down, a short sale might be your best option. The main advantage of selling to an Cincinnati home cash buyer like ASAP Properties, LLC is that they have a team of dedicated people that are experts in negotiating short sales with the bank at no cost to you. Because we’ve purchased numerous properties via a short sale we have this process down to a science.
If you’re having difficulties paying your mortgage, give us a call at 513-549-4145 or fill out our form and will get you a fair cash offer within 24 hours and get our team to coordinate a short sale if necessary.