Calculate the Real Amount You Owe On A Short Sale

The definition of a short sale – selling your home for less than you owe on it. Simple, isn’t it? Well, slow down, Einstein. For San Diego short sales or Phoenix or Tulsa, Oklahoma — you first have to figure out one important fact: what do you really owe on the property?

The most popular answer for this question when I ask people is: “my mortgage balance.”

But that is not all of it and that’s why I wrote this blog.

First, you do have your primary or first mortgage, mortgage principle balance and any past mortgage payments that you have missed. You will also have interest due, and the penalties that your bank is charging if you are behind on your mortgage payments.

Ok, so this covers your first mortgage debt, but there is so much more.

Do you have a second mortgage on the home? A second mortgage can trip you up before you know what’s hit you. That’s because the second mortgage holder must agree to the short sale, and they have historically gotten the short end of the stick when it comes to short sales, foreclosures and bankruptcies. But that’s another topic, so for now, you can count on having to pay your second mortgage company something to let you short sale your home.

At this point you may be thinking, “that’s it isn’t it?” Well, no it’s not, let’s keep looking.

• Do you belong to a homeowner’s association? Are you behind on the dues, or will you be behind by the time the short sale goes through? The HOA fees that are unpaid are considered part of the debt as well.

• What about your property taxes? If you are behind then add that amount as well.

• Um, do you owe the IRS any back taxes? These could be on your home too.

• Do you have mortgage insurance on your home? If so, you may have to pay a little somethin’ somethin’ to your lender’s mortgage insurance provider to let you out of the loan.

Ok, that is all that I can think of off the top of my head for who you have to payoff while doing a short sale.

Oh, wait – don’t forget the costs associated with the sale. Some lenders will require you to pay the sales costs and other won’t. This includes who is paying the real estate agent representing you in the short sale transaction. For any of these costs you may be able to negotiate with the buyer to pick up some or all of the tab, but you will have to be prepared to pay them if they won’t.

Now, I think we’re to the bottom of my list of folks who may have their hand extended for payment in your short sale transaction. For sure it ain’t just what you owe your first mortgage company.

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