There are many people who owe more than their property is worth, it’s a huge boat and many of us are in it. Old Republic Title and RooPho Realty has teamed up to help people who decide a Short Sale is in their best interest. Most of the reasons for doing a short sale are very specific to your situation. I’d be happy to sit down with you and provide you with information that will make the decision a little easier. Nick Heth, of Peoples Mortgage, has delt with many buyers who now have one or the other on their credit score. Here’s what he has to say; “When people ask me about the credit score hit of a short sale vs. a foreclosure, I think they should be more concerned with the effect of when they will be able to buy again? With a short sale it’s as little as two (2) years, with a foreclosure the banks are now requiring seven (7) years. Your credit will go down with both but certainly the short sale is going to affect it less. Your credit will recover quicker than even the two years, if you keep your other bills paid on time.”
Also, in many cases, when you foreclose the bank can send you a 1099 IRS form and you may have to pay some income tax on the loss your bank took. Please check with your tax preparer to see how this will work for you. Arizona is a “Non-Recourse” state. In summary, that means the bank can not send you the 1099 IRS form. However, that ONLY applies if you are on the original loan that you purchased the property with and you have not taken any equity out of the property. As I am not an Accountant , Tax Preparer or Real Estate Attorney, please verify all of this information with appropriate professionals.