Now that New Year’s Eve has officially arrived, many of us will begin looking back and reflecting on these past 12 months. But along with that, many of us will also start looking ahead to what 2017 might also have in store for us moving forward, and for some Minneapolis home owners, that might mean making a few tough decisions over the course of these next few months.
If the end of 2016 didn’t necessarily go as planned and you’re having trouble paying your mortgage, selling your Minneapolis home as a short sale may be a step in the right direction. But before you decide to move in any direction, here’s what to consider before ultimately choosing to go the short sale route:
First, a short sale will negatively impact your credit score. While it may not do as much damage as a foreclosure, short sales, foreclosures, and deeds-in-lieu of foreclosure are all registered as “not paid as agreed” accounts on your FICO score. So keep that in mind.
Next, selling your home as a short sale might not cancel out all of the remaining debt on your mortgage. Keep in mind, however, that every short sale agreement is different; so to be certain you won’t need to make any more payments to your lender after selling your home, make sure you and your representatives read through every bit of the short sale agreement thoroughly before signing on the dotted line.
Finally, you might also owe additional taxes to the IRS after selling your home as a short sale. Believe it or not, the Internal Revenue Service considers any forgiven amount of money on your home loan as income, meaning might need to pay state and federal income tax on it. But also keep in mind that depending on your specific situation, you may also be able to exclude the forgiven debt from your income, meaning you won’t need to pay any additional tax. As mentioned above, every situation is different and viewed individually.
If you’re thinking about selling your Minneapolis home as a short sale in 2017, contact our short sale experts with The Kris Lindahl Team today for a free, no-obligation consultation!