How soon after a short sale are you able to purchase a new home?
Long story short…
We paid $225,000 for a home in Orlando, Florida 3 years ago before the market went down the drain. Things happened, and our income was cut in half. We were able to get our mortgage modified, but we don’t want to be here for much longer. Our house is now only worth about $130,000, tops. If we sold it through a short sale, would that extra $100,000 be our problem, or would the banks write that off? How soon after that short sale would my husband and I be able to buy a new, less expensive house? Thanks!
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3-5 years at earliest
could be tax consequences, if it’s not principal residence for x years
your credit takes a hit
need a down payment
Generally better to stick it out and wait for market to recover if you don’t have to do this
yes, you would probably have to declare bankruptcy
If you can get your mortgage company to do a “non recourse” short sale, then you will not owe the difference between the sale price and the mortgage balance. However if the short sale is a “recourse” short sale, then you will owe the difference. I believe that it will be about 2-3 years before you would be able to buy another home. You should check with lenders in your area because in some localities it is a shorter waiting time and in others it is longer.
If you have the cash, you can buy a new home immediately.
However, if you are held liable for your loan and ‘default’ on it, you can lose up to 300 credit points and will have problems buying a home for potentially 5-7 years.
Whether or not the bank writes off the $100k is up to the bank.
That 100k would be forgiven by the bank, if FL is a non recourse state, and they would most likely send you a 1099 that you would have to claim on your taxes. That means you get to pay tax on 100k.
You sure you want to do a short sale now? LOL
After a short sale, you will have about 3 years before you can get another mortgage. During that time, you will need to get your credit score back up and have a perfect rental history with no late payments.
You won’t be buying right away.