What is a Short Sale?
I still get this question all the time, even though short sales are a common thing in the Portland Metro Area. So I thought I would answer it in my blog so that all of you searching for home (and possibly selling a home) will have the correct information.
Short Sale: A Definition
Simply put, a short sale is when a homeowner is trying to sell a home when he owes more on the mortgage than the home is worth. The homeowner (seller) is going to ask the bank to take loss, in an attempt to forgo the foreclosure process.
Let’s look at an imaginary scenario to explain it further. Let’s say that homeowner Smith bought his home in 2005 for $300k. He took out one of those 100% loans that were the rage back then. Well, things were going fine until he got laid off 6 months ago. And he hasn’t been able to find a job since. Mr. Smith’s savings are dwindling fast so he has decided to sell his home. To make matters worse, the value of the homes in his neighborhood (and most of the city) have gone down 20%. His Realtor told him he could only get $240k for his home right now.
Mr. Smith owes a little under $300k and can only sell his home for $240k. Mr. Smith will put his home for sale as a short sale and try to get the bank to take payment in full for $240k.
Will the bank take the short payoff? The short answer is: it depends. See my next post to get the long answer and why I never recommend short sales to my buyers.
Why Won’t the Bank Do My Loan Modification?
If you got your home loan from Indymac Bank and are hoping to get a Loan Modification from them, you need to look at this video:
The IndyMac Slap in the Face
It’s an eye opening look at why OneWest (they took over IndyMac’s assets) might not have any desire or motivation to do your loan mod and help you stay in your home.
This may not be true for all banks. Take this video with a grain of salt. Some banks are doing right by their customers.
Take a look, and make sure your volume isn’t turned up too high, these guys have had way too much coffee!
Do You Qualify for the First-Time Homebuyers Credit?
Update: First-Time Homebuyers Credit has expired.
As most of you know, the first-time homebuyer’s credit has been extended to the end of April 2010. This is great news for Portland home buyers. But the question is: who can get the credit?
The good news is that more buyers are eligible now than before. Even better news is that if you buy a home in 2010, you can claim the credit in your 2009 return. That means up to an $8,000 credit on last year’s tax return. Very cool.
Here is a summary of who can take the credit:
- Purchase must be your principal residence and you must live in the home for at least three years. If you sell or move before that, you must pay back the money to Uncle Sam. If you live in the home for over three years, the money is yours to keep.
