subject: Stop Foreclosure in Gwinnett Georgia - Short-Sale Misconceptions Part 2 [print this page] Stop Foreclosure in Gwinnett Georgia - Short-Sale Misconceptions Part 2
Here is the second part of my article collection breaking down a few of the short-sale myths out there. I work inside the short-sale sector, helping people stop foreclosure in Gwinnett Georgia. Not long ago people came to me being aware of very little about short-sales, nowadays people come to me instead with numerous misinformation.
Many people who are interested in a short-sale are looking to work them selves beyond a poor financial circumstances. So, it's no surprise that they pay attention to info out there that shows short-sales like a sunshine and roses choice. It looks like the solution to their prayers.
I am not discouraging you against going the short-sale route, but, before you do, you'll want to be informed that a short-sale will be a difficult choice. It means walking away from your residence and contains a few financial repercussions.
There are three areas you need to be aware of with regards to a short-sale: taxation, provider civil action and credit history.
1. Taxation - Before making a short-sale you'll need to be aware of how tax can impact on you. To begin with you need to understand if you transfer the deed of your property willingly (short-sale) or unwillingly (foreclosure) the IRS view the income created throughout the sale as taxable. The government realized that this put folks already struggling with hardship within a really awful scenario, as a result in 2007 they enacted the Mortgage Forgiveness Debt Act. Which means that if you make a short-sale, the proceeds from the sale are not considered taxable.
You should make sure that you qualify for the Mortgage Forgiveness Debt Act. Nearly all homeowners do, but some don't.
2. Mortgage lender Civil Action - There's a lot of frightening details about financial institutions taking homeowners to court for any deficiency following a short-sale. This would mean that the financial institution can take legal action against the home owner for any outstanding debts on the mortgage loan not repaid from the short-sale. This could happen, but 2 facts have to be considered:
* The cost of a short-sale for your loan provider, generally, is lower than the price of a foreclosure. Forcing a home owner to court afterwards will reduce any savings they made.
* For any lender to take civil action, it has to be written in to the short-sale agreement.
3. Credit ranking - The effects of the short-sale depends a whole lot on what your individual scenario is. There's no opportunity that you'll emerge from a short-sale without it affecting your credit score.
Among the main steps you can take to limit the harm to your credit history is to move quickly. If you're 3 months late 70-135 points could be subtracted from your credit rating. The short-sale procedure may last 2-3 months so if you're defaulting in the course of the total period this may be a big hit to your score.
One advantage of a short-sale is it'll indicate you've paid on your history of credit, which makes a huge difference to lenders in the future. Also, many folks do not realize with a foreclosure how the lenders add all of the expenses from the foreclosure towards the judgment amount. This may mean a $200,000 debt being recorded as being a $250,000 debt.
So, 2 short-sale myths down and 2 to go! If you're attempting to stop foreclosure in Gwinnett Georgia or any other location in the U.S and are taking into consideration a short-sale, understand your facts prior to deciding to act.
