Sometimes unexpected events happen in one’s life that create havoc. There may be a death of a loved one, divorce, medical bills or the loss of a job. In such circumstances, people may lose the ability to pay for their homes. Fortunately, there are many options that homeowners may be able to pursue that will allow them to stay in their homes. Some other strategies may result in the loss of the house, but not leave the homeowner with such crippling debt.
A short sale is seen as a means of last resort. It’s not necessarily an option just because the market drops and you suddenly become upside down on your loan. To qualify for a short sale, you must be able to show that you’re experiencing financial hardship. Not all individuals are eligible for a short sale. If a homeowner is eligible for a loan modification or refinance loan, then their lender may not approve a short sale of their property.
San Antonio homeowners can often avoid a short sale scenario. They have to keep a regular eye on their home’s value and post it for sale when a decline in property values is noticed. Homeowners can also stave off becoming upside down on their mortgages by simply avoiding taking out home equity loans or lines of credit against the full value of their Texas homes.
A short sale can negatively affect a credit score similar to a foreclosure or a deed instead of foreclosure. A homeowner that wants to move forward with the short sale process must be prepared to both supply and fill in a lot of paperwork. Homeowners may have to submit the last two years of their tax returns, bank statements and pay stubs to be allowed to move forward with the short sale process.
The result of a short sale may be considered taxable income by the Internal Revenue Service (IRS).
Homeowners who move forward with the short sale process may have to wait up to four years before they’re eligible to apply for a new Fannie Mae-backed loan as well.
A short sale may not be right for everyone. A real estate transactions attorney can discuss your concerns with you and help you decide whether it’s the right course of action for you to pursue.