Tips On How To Short Sale Real Estate To Avoid Foreclosure In Fairfax
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.
The difference between the short sale price and the original mortgage can be paid through the two options offered by mortgage companies. By agreeing to any of these two options, it implies you agree to still owing a considerable sum of money on 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. Based from the earlier example, with the use of a deficiency judgment the mortgage company can demand the remaining difference of $20,000 from the mortgagee.
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.
If you receive a 1099 form instead of filing for a foreclosure deficiency judgment you will have to list that $20,000 as income on your taxes, but you may only owe 10 – 15% of this income on the 1099 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 short, no matter what the income or amount is in the 1099, taxes owed on it will remain at 10% so a $20,000 income on the 1099 will yield to $2,000 worth of taxes and so on.
No matter how you choose to avoid foreclosure in Fairfax, the reality is, you will end up in a considerable amount of debt. Since lenders have two ways of dealing with mortgage debt, it can also be owed differently in two ways, either with the IRS or with the mortgage company. The good news is no matter which way you look at it, this amount owed is way lower than the impact of a foreclosure on your property.
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.
