Posted on: 29th Oct, 2010 04:17 pm
Hi,
I live in CA - have a first home that i lived in for 5 yrs. Paid $390k, put down $90k. Got a second HELOC for 38k in house upgrades. Five years later, the house is now worth $165k.
My wife passed away and I could no longer make the payments, I have since moved to another home. I have missed two payments thus far on my original underwater home. I have just started the Short-Sale process on the underwater home.
My question is if this is the best option for me - to go through with a short sale? From my understanding my agent has to get both the primary and HELOC lender to agree and I will still have to pay a percentage of the HELOC to get relieved of that loan. Will I also have to pay taxes on the difference of the amount owed to the sale of the home..if it does go through the short sale? or am i covered by the Debt Forgiveness Tax Relief act?
Should I be doing a quit claim (is that the same as a deed in lieu?). As, doing a short sale I am getting credit hits every month i do not make a payment. If i do a DIL i would get hit only once for the aprox 250 points. would i still have to pay a percentage of the HELOC to relieve that lender debt? What is the best choice here in my situation??
Thank you very much for your answers and help!
-Russel
I live in CA - have a first home that i lived in for 5 yrs. Paid $390k, put down $90k. Got a second HELOC for 38k in house upgrades. Five years later, the house is now worth $165k.
My wife passed away and I could no longer make the payments, I have since moved to another home. I have missed two payments thus far on my original underwater home. I have just started the Short-Sale process on the underwater home.
My question is if this is the best option for me - to go through with a short sale? From my understanding my agent has to get both the primary and HELOC lender to agree and I will still have to pay a percentage of the HELOC to get relieved of that loan. Will I also have to pay taxes on the difference of the amount owed to the sale of the home..if it does go through the short sale? or am i covered by the Debt Forgiveness Tax Relief act?
Should I be doing a quit claim (is that the same as a deed in lieu?). As, doing a short sale I am getting credit hits every month i do not make a payment. If i do a DIL i would get hit only once for the aprox 250 points. would i still have to pay a percentage of the HELOC to relieve that lender debt? What is the best choice here in my situation??
Thank you very much for your answers and help!
-Russel
Hi rusty,
welcome to mortgage fit,
Firstly I must congratulate you for such a elaborated question stating every minute details.
As far as taxes are concerned you don't have to pay the federal taxes on differed amount but state taxes are supposed to be paid.
quitclaim and deed in lieu foreclosure are altogether different thing....but in deed in lieu you ultimately write down your property to lender in lieu of getting relief from the loan.
for best choices on this part you can refer below mentioned post.
http://www.mortgagefit.com/california/debtrelief-act.html
Feel free to ask any further query if you have.......
DIPA
welcome to mortgage fit,
Firstly I must congratulate you for such a elaborated question stating every minute details.
As far as taxes are concerned you don't have to pay the federal taxes on differed amount but state taxes are supposed to be paid.
quitclaim and deed in lieu foreclosure are altogether different thing....but in deed in lieu you ultimately write down your property to lender in lieu of getting relief from the loan.
for best choices on this part you can refer below mentioned post.
http://www.mortgagefit.com/california/debtrelief-act.html
Feel free to ask any further query if you have.......
DIPA