| In the last few years, real estate industry has gone | | | | must prove they have suffered a financial hardship |
| through a drastic change. It has moved from the | | | | and lag behind in their mortgage payments by several |
| seller’s market to buyer’s market. Many people | | | | months. Once the inability to make the required |
| are adopting short sale option to stop foreclosure. | | | | mortgage payment has been demonstrated, they must |
| Nowadays it has become a common thing to opt for | | | | be willing to cooperate with the process. If bank |
| short sale. Once upon a time, home owners took | | | | forgives the remaining balance, a 1099 IRS tax form is |
| benefit of low payments which were offered in the | | | | often sent. The difference between the sale price and |
| form of five year adjustable rate mortgage but now | | | | the amount owned is considered taxable income by |
| they have realized it is not possible for them to pay | | | | the IRS in certain circumstances. |
| new, higher interest mortgage payments. The next | | | | If a homeowner faces foreclosure problem, it will be on |
| step for homeowners would be to refinance their | | | | the credit report for nearly seven to ten years. It also |
| homes to a lower rate or take out additional equity in | | | | lowers a credit score by up to 100 points, so selling at |
| order to pay down other bills. Due to recession, value | | | | a short sale and paying some small amount of income |
| of homes has dropped so rapidly that the equity they | | | | tax may be worth it. This short sale can be on the |
| thought they had is gone. | | | | credit report for a short period which may affect the |
| Due to recession, homeowners know that their home | | | | credit report by an average of 45 points. Short sale is |
| will not sell for enough to pay the balance of the | | | | considered the best solution for homeowners who |
| mortgage, let alone the fees and commissions that | | | | cannot afford monthly payments, especially when |
| accompany a sale. Short sale can be one of the best | | | | situations will not change in the near future. There are |
| options for selling their home and avoiding foreclosure | | | | various empty houses which are owned by mortgage |
| or bankruptcy. Due to this reason, homes are sold for | | | | companies waiting for resale, many financial institutions |
| less than the total amount still owned to the bank, | | | | are ready to help homeowners find a solution. With this |
| including accrued interest, any late fees and principal | | | | method, homeowners can re-establish credit and get |
| balance. Through short sale, homeowners are able to | | | | new loan which is faster than foreclosure. Through |
| collect more money which was not possible otherwise. | | | | short sale, homeowners can sell their house. |
| If a homeowner wants to qualify for short sale, they | | | | |