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Will I owe taxes after a short sale?

Wednesday, May 22nd, 2013

When your lender agrees to a short sale of your home it is agreeing to cancel a debt.  The IRS in the past considered your lender forgiving a debt a taxable event. But, because of the real estate meltdown Congress passed the Mortgage Forgiveness Debt Relief Act of 2007 which expires on December 31, 2012.  Most notably, The Debt Relief Act provides an exemption for any debt canceled by the lender which was used “to buy, build or substantially improve your principal residence“. What this means is there will be no tax consequence if there are certain conditions that are met.  Most importantly the debt canceled by the lender must have been used “to buy, build or substantially improve your principal residence.” So if you were like millions of Americans that refinanced your home to pay off bills, send your kids to college or take a trip, and the bank agrees cancel that debt in a short sale you will not be eligible for tax relief.  Additionally the home must be your primary residence. So if you are short selling a second home you will not be eligible for the tax exemption.  If you qualify the IRS will forgive taxes up to 2 million dollars. California has a similar program effective for taxable years 2009 through 2012, the maximum qualified principal residence indebtedness eligible for relief is $400,000 for taxpayers who file as married or registered domestic partners filing a separate return and $800,000 for taxpayers who file joint returns, single persons, head of household and qualifying widow or widower (other individual taxpayers). Read More

Now that I have paid down my credit cards, should I use them again?

Wednesday, May 22nd, 2013

Completely erasing debt on your credit cards is a great way to improve your credit score. However, you can keep increasing your score by continuing to use your credit card lightly and paying the balances in full each month. This will prove that you can responsibly handle debt and will in turn raise your score. However, if you find that you can’t use the cards lightly, you should consider putting your credit cards away before you run up your debt. Read More

Getting a home loan is easier than you might think

Wednesday, May 22nd, 2013

Home loan interest rates are at record lows yet many people hesitate to apply out of fear of getting rejected. There are many rumors flying around that are discouraging consumers from entering the housing market. However, getting approved for a home loan is easier than many people think. There are a wide range of programs available for a variety of qualified applicants. One of the biggest fears consumers have about applying for a home loan is not having money for the down payment. Many believe a down payment of 20% is required. However, Fannie Mae and Freddie Mac’s standard minimum for a down payment is 5% with mandatory mortgage insurance coverage. There are many options to get assistance with getting money for a down payment. If you are a veteran or active member of the military, you can get assistance through the zero-down Veterans Affairs Guaranteed mortgage. In addition, the VA will allow your seller to pay your loan fees and closing costs as long as they don’t exceed 6% of the total house price. If you don’t mind living on the outskirts of a metropolitan area, there is a program to buy a home for nothing down in many communities approved for rural guaranteed mortgages. This program is becoming more popular. More than 130,000 borrowers were approved and received low or no down payment guaranteed mortgages. Read More

If you file bankruptcy without an attorney, you get what you pay for!

Wednesday, May 22nd, 2013

A recent comprehensive report on self-represented litigants in the Central District of California Bankruptcy Courtwas conducted titled “Access to Justice in Crisis: Self-Represented Parties and the Court.

The report summarizes what the Court knows about its self-represented litigants, and it identifies what happens to their cases in comparison to attorney-represented consumer cases. Read More

2 Mortgage Giants Set to Cut Principal

Wednesday, May 22nd, 2013

Some Fannie Mae and Freddie Mac borrowers could see their mortgages shrunk through principal reduction, as California makes an effort towards getting more homeowners into a foreclosure prevention program.

State officials are now dropping a requirement that banks match taxpayers’ funds when homeowners receive mortgage reductions through the program. By eliminating this requirement, it is hoped that it will make it easier for homeowners to get principal reductions. Read More

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