need advice! thanks!

gregg_king2007 · Joined: 09 Mar 2008 Posts: 2 1.89 Dollars($)

Hi. I have bought my house for $370k on a 7.75 and 8.25% interest(80/20 loan. that was 2 yrs ago.. (im paying $2910/month and its very hard for a single person like me) now i cant refinance my house because the appraisal is only 250k something. ive been trying to refinance since last year and is not being approved all the time.. now i have no choice but to give up the house that i worked hard to achieve and strived to keep..
my concern now is, whats my best option? short sale, foreclosure or deed in lieu of foreclosre?
im talking to a realtor now for a shortsale although she havent filed the papers yet..and im still currrent on my account..
my only wish now is that i go to the best option that doesnt damage my credit as much as if i go to other route.. i have 720 credit score and im planning to go back to school to study medicine.. and i dont know how ill get approved for a student loan if i have a bad credit.. i have been very meticulous in my payment and i was never late in any of my credits.. its sad that im going to taint my credit score that i took care of because im just a victim as others are of this economic hardship.. thanks in advance for your response..

jameshogg

Hi,

Welcome to forums.

I think your appraised home value has fallen short of the loan that you wish to take by refinancing. I can understand how you're feeling since you've done a lot of hard work to keep your credit good. But at times, you don't have a suitable option also.

Now, if you go for a short sale, do you think you'll be able to pay off the remaining debt, I mean the difference between the amount you owe and the sale price? If you can pay it, then short sale will be the right option to go for.

Thanks

0.10 Dollars($)

Hi.. From what my realtor explained to me, he will negotiate that I dont have to pay the difference.. any comments?thanks..

Caron · Last edited by Caron on Mon Mar 10, 2008 4:56 am

Hi Gregg,

Welcome back to our forums.

Realtors do negotiate so that one need not have to pay the difference. At times, attorneys too negotiate.

Due to negotiations, the lender may forgive the unpaid debt and it will be reported as charge-off on your credit report. Afterwards you may or may not repay the debt but you will no longer be responsible for it. But since you are in California, you'll have to pay income tax on the canceled debt unlike in other states.

Just in case you'd like to know how little more about charge-off, please have a look at a previous post on charge off on credit report .

Good luck and do not hesitate to ask further questions. Smile

gregg_king2007 · Joined: 09 Mar 2008 Posts: 2 1.89 Dollars($)

Hi.. im actually in las vegas... and my realtor told me that he will also negotiate that i dont have to pay income tax on the debt.. thanks all for your very fast and expert advice..

Caron · Posted: Mon Mar 10, 2008 5:01 am Post subject: RE:

yes I understand but is that really possible. I say this because the realtor can negotiate as far as the payment of unapid debt is concerned and not the tax. The tax issues are being reported to the IRS. So, perhaps what your realtor will do is to talk to the lender so that he does not report the canceled debt to the IRS as his loss, and hence the IRS won't come to know that you have received income in the form of canceled debt. This can be a possibliity.

Anyway, before you proceed with the realtor negotiating for you, let me give you a word of advice. Instead of a realtor negotiating, it is better if a real estate attorney does the job for you as he is aware of the legal implications at any step of the process.

evolovik26 · Posted: Mon Mar 10, 2008 6:57 am Post subject:

You do not have to pay taxes in a short sale situation currently. They past a law earlier this year. So long as your bank agrees to a short sale you are fine.

jbarto65 · Joined: 04 Nov 2007 Posts: 626 -0.11 Dollars($)

Great information, then the short sale buyer should be happy about this as well.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.03 Dollars($)

A short sale should not affect your credit. The other two options will. It certiainly doesnt hurt to put the home on the market and go to the lender when you have an offer. Most realtors will not charge you anything if the home does not sell. Hope this option works for you.

0.10 Dollars($)

Thanks a lot everyone! very helpful site!

jameshogg · Posted: Mon Mar 10, 2008 11:59 pm Post subject:

You're most welcome gregg Smile

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