Think Short Sale NOT Foreclosure!

As everyone knows, the real estate and mortgage industry has been in trouble over the past few years. Thousands of families find themselves in financial trouble due to drastic rate increases in adjustable rate or interest only mortgages coupled with home prices that have been steadily declining. Most people failed to consider the possibility of the huge increases upon entering the agreements. Only now, they find themselves with mortgage payments that they cannot afford to pay. Often, foreclosure is seen as the only option available to these struggling families. However, there is one important aspect of a foreclosure that people forget – the resulting tax liability.

Foreclosure is always the last resort for someone struggling to make mortgage payments. People usually think it will be the end of their problems. However, the IRS considers debt canceled through foreclosure to be part of a taxpayer’s income. The IRS feels that it is entitled to the appropriate income taxes on that money. It also has access to every taxpayer’s financial information so it can ensure the appropriate taxes are paid. And as most of the country already knows, the IRS is very aggressive in collecting taxes that they know are outstanding and feel they deserve.

A short sale is a FAR MORE viable and FAR LESS destructive solution.

What is a short sale? A short sale is a method in which a bank accepts less than what is currently due on the mortgage as payment in full. With the market in the situation that it is in banks are becoming more and more receptive to this process. It can create a WIN/WIN for both the bank and the homeowner. Yes, there are tax implications with the IRS on the "forgiven or excused" money. This phantom money will get reported by a 1099 to the IRS for you to claim on your taxes in which you would want to seek a qualified and reputable tax professional to assist you with. However, this is far less money to have to claim than the entire mortgage balance!!

Foreclosure is the absolute LAST result that you should be willing to accept. I understand that it is very hard to face this, I know that it seems easier to hide and not answer the phone or open the letters. BUT the more time that goes by the fewer options you will have. There is a very limited window of opportunity to have a short sale. If you find yourself in this situation contact a Realtor to have them assist you!! Let them try to remove this burden off of your back.

I service the Taunton, Berkley, Freetown, Lakeville, Middleboro areas.

Please contact me if you need assistance.

www.berkleymass.com

To Buy or to Wait ~ That is the question

Everytime the tv or the radio goes on we are overwhelmed with different newscasters and financial gurus giving their opinions and market predictions. Has doomsday happened or is it yet to come? Has the sky fallen or are we still waiting for it to fall? And that oh so lovely bubble....has it burst yet???

I just want to scream!!!

What happened to buying a home that you love JUST BECAUSE YOU LOVE THE HOME?!?! I really can't remember when the change happened. Did it happen when I was sleeping? Did someone flick the switch on the lightbulb? Or did a neon sign light up that said "A home is an overgrown stock ....buy, buy, buy and flip, flip, flip!!!"

Where did "buy and stay" go?

If people looked at a home as a long term "investment" than the question "Is it going to go down more in value next year?" wouldn't be applicable. I know it isn't real life anymore to stay in your home for 30 or so years like our parents did (at least mine did and I am almost, but NOT QUITE, 40 yrs old). I can guarantee you my parents didn't buy their home wondering and worrying what it was going to be worth in 2 months or 2 years. It was a place to raise their family. They scrimped and struggled to make that payment every month, and believe me we did without. But it IS real to buy with the foresight of staying for 7 years or so. And if a home is purchased with that type of range in mind a value loss is no longer a concern. Yes, prices have corrected and yes there could be some more correction to come but then the ball starts slowly rolling the other way. First the ball stops rolling, than it takes a slow but not complete roll the other way, than it starts to creep some more, than it makes one complete roll and than it rolls again and again and again. Before too long prices start rising!!!

Don't think of your house primarily as an investment. Think of it as your home. Find a neighborhood that fits, a house you love, and a fixed-rate mortgage you can afford -- and forget about trying to game the market. If you're happy where you are, you are far more likely to stay there awhile -- which is, of course, the best way to maximize your investment.

Visit Southeastern Massachusetts most informative website.

Bobbie Files
Keller Williams Realty
508-789-0217 Direct
bobbiefiles@kw.com