Thursday, March 23, 2017

Can I Still Modify My Mortgage If I Was Trying To Short Sale My Home?

There are a few ways to deal with a defaulted mortgage loan that avoid foreclosure. One way is to offer a short sale of your home to the lender, which is essentially an agreement whereby the lender accepts less than what is owed on your mortgage loan. Another option is to ask for a modification of your existing mortgage, so you can get back on track with the payments. The terms of a modification vary but generally include a reduction in interest rate, which results in a lower payment. But it can be hard to know which choice will work best for you, or whether you can pursue multiple avenues of relief at one time.

For instance, you might need to know if you can ask for a modification while you are trying to get the lender to agree to a short sale. Here is what you can expect with each type of relief:

•           In a short sale you can avoid foreclosure by getting the lender to take the property back for less than what you owe, and that money usually comes from a sale of the property on the real estate market. This can take a while to get done, because you still have to find a buyer and the bank has to agree to the price. There are no guarantees that the bank will accept the short sale offer, but if they do you might still owe! This is because the amount of loan not paid, the amount the short sale was “short”, is forgiven and considered income by the IRS. That means you will receive a 1099 and have to report the amount forgiven as income and pay taxes on that amount. Most homeowners are not able to do this, so a short sale is not always the best option.
•           With a mortgage loan modification you can rest easy knowing that if approved, you will enjoy the benefit of better loan terms. You might also get to skip a month’s payment, allowing you to put some money aside for other bills.

If either of these options sound appealing to you, call us for more information. We can explain them each in more detail and as they apply to your specific circumstances.
If you have more questions about short sales and mortgage modifications, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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