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PROVEN • EXPERIENCED • TRUSTED Mortgage made EASY Your Local Trusted Mortgage Banker O: 732.389.9898 x112 C: 732.742.4951 Andys@njlenders.com Licensed by the New Jersey Department of Banking & Insurance Andy Savoca Division Manager NMLS #7155 39 Ave at the Commons, Shrewsbury, NJ NMLS #1116706 • 10 Day Commitment/Close in 20 Days • Local Appraisers • Flexible Guidelines If you are having trouble paying your mortgage a Short Sale may be an answer to your problems. A Short Sale is a sale of a property where the proceeds of the sale are less than the balance owed on the mortgage covering the property. A Short Sale may be right for many people, but is it the best option for you? Consider the following before deciding on a Short Sale of your home. A Short Sale Won't Save Your Credit Score 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. Short Sales Don’t Always Cancel the Remaining Debt on the Mortgage You may be surprised to learn that a short sale does not automatically can- cel your obligation to pay off the remaining debt on your mortgage. To be certain that you will not be on the hook to make any more mortgage pay- ments after your short sale closes, ask your lender and get their answer in writing. If your lender refuses to give you an answer, contact an attorney to see if there are any state laws prohibit- ing your lender from collecting the deficiency. You May Owe Taxes on the Deficiency If your lender forgives you for a defi- ciency after a short sale, you may owe taxes on the forgiven amount. That is because it is considered income by the IRS, upon which you may owe federal and state income tax. Under the feder- al Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from your income all or a por- tion of the amount of forgiven debt in a short sale, but only if all of the fol- lowing requirements are met: • The forgiven debt was used to buy, build, or substantially improve your home or to refinance debt incurred for those purposes. • The debt was forgiven between 2007 and 2013. (Congress is consid- ering a bill, the Tax Extenders Act of 2013 [S. 1859], that would extend the Act through 2014.) • The discharge was directly related to a decline in your home’s value or your financial condition. Short Sales: More Things to Think About You have other options. You may want to contact your lender about other foreclosure alternatives, such as refi- nancing your mortgage, modifying your loan, or negotiating the terms of a deed-in-lieu of foreclosure. If you choose a Short Sale, make sure you have enough time to sell your home. Short Sales can take a long time, usual- ly months, to close. You need time to market the property, find a buyer, and negotiate with your lender for approval before your house is foreclosed on. Short Sale negotiations with your lender, or even your lender’s approval of a short sale, will not automatically stop the lender’s foreclosure process. Con- tact your lender managing the foreclo- sure process about postponing any scheduled foreclosure sale to give your short sale enough time to close. Like any home sale, once the Short Sale closes, you will have to move. If your primary goal is to stay in your home for as long as possible, negotiating other alterna- tives may be a better option for you. WHAT IS A SHORT SALE? By: Laura M. Rys, Esq. www.theconnectionsnj.com