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Stop Alaska home foreclosure: short sale as an option

Is your home worth less than you owe on it? One way to stop Alaska home foreclosure is a short sale. Talk to your lender today.

stop Alaska home foreclosure short saleIf you need to stop Alaska home foreclosure, a short sale may be the best option. In a short sale, you sell your home for less than the balance of your mortgage. If your bank agrees to a short sale, you can avoid foreclosure. Doing a short sale still impacts your credit history, however.

First, ask your lender if you can sell your home via short sale. The bank may ask you to prove that you cannot pay due to economic hardship or other circumstances. If you have a second mortgage with a different lender or a home equity line of credit with a bank or credit union, you will also have to ask those financial institutions to approve a short sale. Every bank has different criteria for determining whether a buyer will qualify for a short sale, so you will not automatically be approved. You must meet all of the criteria established by your lender.

What is your home's value? Find out here.

Before doing a short sale, it is important to know how it will affect your credit. Missed payments have the greatest impact on your credit score, so if you have already missed several mortgage payments, then your score has already decreased. When the bank reports the short sale to the credit bureaus, it will appear as a derogatory item on your credit reports. It may even be more difficult to obtain another home loan, as some lenders will not approve mortgages for borrowers who have resorted to short sales in the past.

Even if your bank approves a short sale, ask to have the deficiency balance waived. In some cases, the bank will agree not to pursue you for the deficiency. If the bank forgives the deficiency, it will send you a 1099 form for any amount over $600. You must report this amount as income and pay taxes on it like you would any other form of income. You may also owe additional income tax to the Alaska Department of Revenue.  You may be able to have the deficiency forgiven under the Mortgage Forgiveness and Debt Relief Act.

If you sell your home in a short sale, the most important help may be hiring the right real estate agent. Find an agent who specializes in short sales and negotiating the sale with the buyer and the lender. Reply! is a good resource to research your home value and find an agent near you.

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