Short selling a house in Aliso Viejo
You owe more money on your home then it is worth, your income is not what it used to be, and debt is mounting. Is it time to short sell your house in Aliso Viejo?
What is a short sale?
A short sale is a sale of real estate in which the proceeds from the sale are less than the balance owed on the mortgage.
A short sale is when a lender reduces the loan balance on a piece of real estate because of financial hardship on the part of the borrower. The home owner sells the property for less than the outstanding amount of money still owed on the the loan. The proceeds of the sale are given to the lender, sometimes (but not always) in full satisfaction of the debt.
Short sale Vs. Foreclosure
There are many myths floating around when it comes to the difference between a short sale and a foreclosure. The first thing you must be aware of is that a short sale will normally affect your credit the same as a foreclosure. On average, your credit score will drop 200-300 points. This would mean that a 720 fico could drop to a 420. The primary difference between a short sale and foreclose on credit is the amount of time they will affect your score. A foreclosure can reduce your score for up to 7 years while a short sale can stop its adverse effects after only 24 months.
Tax issues
The IRS considers any debt forgiveness as taxable income. This means that if you short sell your house for $100,000 less then you owe, the IRS can tax you on the $100,000. However, recent legislation prohibits this as long as the debt was incurred between 2007 and 2010. Please contact a tax attorney before you proceed with a short sale.
Aliso Viejo short sales
Currently, the majority of homes for sale in Aliso Viejo are short sales. More and more people are opting for a short sale in today's market. With the right real estate agent, a short sale can be a fairly painless experience and can be handled in a timely manner. This increase in short selling is causing new legislation to be brought forward to assist people who have been affected. If you are considering a short sale in Aliso Viejo, make sure you contact:
A good attorney
A good real estate agent
