We have all read the news that the home foreclosure rate is skyrocketing, and it is not something you’d want to experience first-hand. When you do get yourself in that situation for whatever reason, going into a mode of not answering the phone and feeling sorry for yourself won’t do you much good. As an alternative to avoid foreclosure in Fairfax, a short sale may not be such a bad idea so it would be best to get hold of reliable professionals to assist you with that short sale so you can save your home from foreclosure.
In essence, during a short sale, this transaction lives up to its name because the purchase price agreed upon is much lower than the amount owed on the mortgage. Even with the foreclosure company acquiring the home for a fraction of the original mortgage amount, say they buy a home worth $100,000 for just $80,000, you still continue to owe the original amount. Naturally a $20,000 discount can be earned from this deal which makes it very appealing from the perspective of an able buyer. The homeowner is not out of the woods yet as a debt balance remains even after the short sale.
Your mortgage company has two options for dealing with the rest of the mortgage debt. Both of these options do mean that you owe money on the rest of your mortgage. A foreclosure deficiency judgment or a 1099 form can be served by the mortgage company to claim the remaining balance not paid in the short sale. A mortgage company has all the right to claim the $20,000 deficiency from the short sale to you with the use of a deficiency judgment.
After being able to avoid foreclosure in Fairfax via short sale, a deficiency judgment is then passed by the mortgage company against you so they can claim the balance owed. Just like in any other lawsuit, if a deficiency judgment is filed against you, you will have no choice but to make the necessary payments to the mortgage company for the amount owed. To make lives easier for both parties, most mortgage companies would not resort to a deficiency judgment if you can prove financial hardship. As a workaround, what they will do is consider the $20,000 a business loss and consequently send a 1099 form instead of a deficiency judgment.
In the event you do receive a 1099 form in lieu of a foreclosure deficiency judgment, you will have to declare the deficiency as income with 10-15% of it going to the IRS. At the end of the year, the amounts listed in the 1099 will have to be declared as income. The income declared in the 1099 will be taxed appropriately as mandated by law, based on the fact that it is still income earned, but it will not significantly impact the tax for the whole year because not much income was earned on the same year. In essence, only 10% of the income listed in the 1099 will be owed as taxes.
When you short sale to avoid foreclosure in Fairfax, you will end up owing some money. Depending on how the short sale was handled, you could end up either owing to a mortgage company or to the IRS. Although an amount remains to be owed after a short sale, it is a much better alternative compared to a foreclosure which not only lowers your credit score but also prevents you from making loans in the future.
Foreclosure doesn’t have to be an option…avoid foreclosure in Fairfax now. If you want help in saving your home, get in touch with us…avoid foreclosure in Fairfax.
Relax many of us are having the same issues with our portfolios these days…avoid foreclosure in Fairfax now. The team is ready and willing to help you figure out your options for avoid foreclosure in Fairfax.
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- Successful Purchases In Real Estate
- Some Tips For Real Estate Owners Wanting To Lease Their Land
- Loan Modification Programs Can Prevent A Home Foreclosure
