In the Houston area, a lot has happened since we last looked at foreclosures. Houses in some form of foreclosure have plummeted to less than 200. Right now there is less need to research a short sale in Houston as a way to move on from a bad investment.
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender must agree. Usually, a short sale is the result of economic or financial hardship.But times change, and the economy can turn around and go the other way. With that in mind, let’s take a look at the short sale in Houston and see what you should know.
NOLO says saving your credit score may be the most touted reason for choosing to short sale your home rather than letting it be sold at a foreclosure sale, however according to myFICO, short sales, foreclosures, and deeds-in-lieu of foreclosure are all “not paid as agreed” accounts and are considered the same for purposes of your FICO score.
When a lender approves a short sale, what is the lender agreeing to do? At the very least, the lender agrees to remove or release the lien on the property. A seller would have a near-impossible task selling a property without this lien release.
Is the lender also agreeing to cancel the seller’s obligation to repay the loan in full? Not necessarily. Some lenders ask sellers to sign new, unsecured promissory notes before approving the short sale. Other lenders, without asking for new promissory notes, reserve their right to collect the deficiency — the remaining balance of the debt.
If your lender forgives you for a deficiency after a short sale, you may owe taxes on the forgiven amount. That’s because it’s considered income by the IRS, upon which you may owe federal and state income tax. Under the federal Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from your income all or a portion of the amount of forgiven debt in a short sale.
Since a short sale in Houston is a complicated transaction. It is recommended that you hire an attorney to review the documents. The release of lien and protection from tax deficiency are very important to your financial welfare.
Since our inception, we have been helping homeowners along with improving communities in every city in which we work.
We have extensive knowledge of the business, a network of resources, and years of expertise. P2 Properties can assist homeowners with a wide variety of real estate problems. We pride ourselves on our reputation for working one-on-one with each customer to handle their situations.
With the ability to directly purchase homes and make cash offers, we can create an extremely fast, and hassle-free transaction.