Minnesota Short Sale Expert

I need to start off by saying that I am NOT an attorney and do NOT intend to offer any legal advice with this post. With that said, people ask me all the time what the effect or consequence a short sale will have on them with regard to having to pay taxes. it seems as though most that are in this position have heard that when doing a short sale in the past you were always taxed on the difference between what the bank accepted and what is owed on the property. This was indeed true…in the past.

In December of 2007 Congress passed a new bill called The Mortgage Debt Relief Act of 2007 that changed the rules as far as tax implications go when a homeowner has a debt that is cancelled. Please click on the above link to read all of the details regarding these changes but I will give you a “thumbnail” version of some of the basics that effect many that are looking to do a short sale.

If you have a primary residence that goes through a short sale that cancelled debt in most cases will fall under these new rules. You WILL receive a 1099C at the end of the year showing the amount of cancelled debt. However, when doing your taxes at the end of the year you will also need to fill out Form 982 which will be added into your return. This basically  offsets the 1099C that the lender sends you.

If the property was an investment property or second home the rules are different and often times (unless you can show that you were insolvent at the time of the cancelled debt) you WILL be responsible for the tax amount on the difference. Please keep in mind that there are many different options and scenarios with each of these cases and you should consult your tax advisor to determine how you will be affected.

We all realize by now that this is a great time to be a buyer  in this real estate market. But where do we find the best deals..?? Surprisingly it is NOT always in foreclosures as most may lead you to believe. In fact some homeowners that are selling what I refer to as a “regular” home are finally pricing them to sell and that means in the same range of what a similar foreclosure home might go for.

You do have options when searching for the “best” deal. These include of course the foreclosure properties but also the “regular” homes as well as short sale properties. Looking at each of these individually you need to ask yourself what sort of time frame you are dealing with and how soon you have to move into the new property. If you need to move in soon and really do not have time to wait then a “regular” home or foreclosure are the best ones to look at. However, if you are not in a huge hurry or can take your time then a short sale may offer a very good value.

If you decide to pursue short sale properties you should expect the process to take between 2-4 months before the approval comes in from the lender(s) and you close on the property. This may seem long but if you are willing to wait the deals can be very good. Compared to many foreclosure properties short sale homes often are in very good condition and may not need to have much if any money to be able to move right in. There are a lot of opportunities out there right now so it’s best to keep an open mind and look at each situation to see if it works for you. If it does make a move and put in an offer. 

Please feel free to contact me directly for assistance with any of your real estate needs or to simply ask questions. I can be reached anytime at 763-242-6303 or via email Rob@MnRealEstateTeam.com.

We have all heard by now about the $8000 credit that is available for first time home buyers right now. But what most do not know is that there also other programs out there that offer such things as down payment assistance as well as a reduction in monthly payments. These programs are tailored to be specific to certain areas of town but if you are looking in one of these areas they can be a great way for that new family to get into their first home.

Most people simply do not know about these programs because their lender either does not have the product available in their list that they work with OR they are simply uninformed about them. These programs can be a great way to help boost our economy and get more people into their first home. 

As a buyer you need to be educated as to your options that are available and with these options changing almost daily it makes sense to work with a mortgage lender that is consistently staying on top of these changes and can help direct you to the best product that fits your situation. Get educated, ask questions and most of all know what your are getting.

If you are interested in working with one of the top lenders in the Twin Cities area Cornerstone Mortgage, that really knows everything there is to know about first time buyer programs, please do not hesitate to click on the link OR contact me directly and I can get you in touch with them.

Thank you

Rob Reinke

763-242-6303

Here are the homeowner eligibility requirements that were recently released by the Treasury Department:

• Foreclosure actions are suspended during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.
• No minimum or maximum LTV ratio for eligibility purposes.
• Loans are eligible for only one loan modification under the program.
• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation.
• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.

Applicants will be accepted into the program until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable

Modification Program. Monitoring will continue through the life of the program.

Please keep in mind that these eligibility requirements are simply government guidelines. Avoid the temptation to qualify or disqualify yourself based solely on what the eligibility requirements indicate. Consult a loan modification specialist who works with lenders on a daily basis to review your situation and determine whether you are likely to qualify. Sometimes the only way to determine whether you qualify is to actually submit your loan modification application.

FHA loan limit in the 11 county Twin Cities area has officially been increased to $365,000 up from the previous limit of $316,000 for the Twin Cities. 

These higher loan limits are great news for buyers (and sellers) in the $315-375 price range.  They now have an option to buy with a down payment as small as 3.5% ($10-12,000).  Before this change, they would have had to use a Conventional mortgage, that typically requires 10% down as a minimum for non-first time buyers ($31-37,000 in this price range).

For first time home buyers this means much less to come up with on your own especially since your FHA down payment can be a gift from a family member.  For move-up buyers if you can sell your smaller home and scrap together the $10-15 grand you need, you can make quite a jump up in the quality of your home.  Factor in the lower interest rates and you might not even be increasing your payment that much once the property taxes come down on the new home next year.

If you are in the market to purchase a home and/or sell your home feel free to contact me directly at 763-242-6303.