Chicago Short Sales: Avoid this mistake on your financial statement

Posted on September 27th, 2010 in Short Selling/Buying.

Chicago IL – One of the short sale documents that your lender will require is a Financial Statement. When you fill it out, don’t make the mistake of not including all your monthly expenses and total debt owed.

Many sellers don’t include all of their debt or monthly expenses. I recommend you include the debt and the monthly payment even when you are behind on payments. In addition, you should include anything that you pay for each month.

Education, groceries, and credit cards that that are behind six months should be included. This may not seem important. But it can have big, long term consequences. Let me explain.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

If you make this mistake, you could be liable for income taxes on the loss. You can be liable for income taxes when short selling a house that you don’t live in. However, some experts say income taxes can be avoided. How?

If you can show that you were “financially insolvent.” I have seen this definition of “financially insolvent” thrown around a lot. The definition is when all of your assets are worth less than your total debt.

According to the experts you are technically insolvent if your house, car, personal possessions, etc are worth 300k, but you owe 380k. Remember, I am not giving you these examples as tax advice.

(Talk to a qualified tax professional before making any financial decisions.) I am simply telling you the reason these mistakes should be avoided.

Here is the other reason you want to avoid this mistake. Many short sale guidelines state that a short sale can only be approved when you cannot afford a property.

This is the case for VA Short Sales, FHA Short Sales, Fannie Mae Short Sales, and Freddie Mac Short Sales. In addition, Fannie Mae & Freddie Mac recently changed their deficiency guidelines.

They state that they will completely release the debt if you are short selling and have a legitimate hardship. However, if you do not have a legitimate hardship, then they may pursue you for the loss.

A legitimate hardship is when you cannot afford your house payment. Not adding 1-2 bills to your financials could tip the scale where you could afford the house. In that case, Fannie or Freddie might pursue you for the loss.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at myrealtorphil@gmail.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (312) 953-6725.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Remember to visit my Chicago short sale blog frequently for great news and stories on Chicago short sales www.Chicago-ShortSaleBlog.com

Thinking about a loan modification? Our Chicago Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Phil Buoscio.

Phil is a Real Estate Agent at Better Living Realty – Buoscio Brokerage, Inc..

Phone: (312) 953-6725. myrealtorphil@gmail.com.

View My homes for sale at www.BetterLivingRealty.com.

Phil Buoscio specializes in loan modifications and short sales in Chicago Illinois. Chicago Loan Modification Help. Chicago Short Sales. Chicago Short Sale Realtor. Chicagoland Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor.  We know Chicago Short Sales. I am a Chicago Short Sale Realtor. Chicagoland Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor. We do business in Pilsen. McKinley Park. Bridgeport. Wicker Park. West Town. Ukranian Village. Lincoln Park. Near North. River North. East Village. Logan Square. Uptown. Edison Park. Portage Park. Hermosa. Lincoln Park, South Loop, West Loop. Bronzeville. Hyde Park. Kenwood. Oak Park. Brookfield. Cicero. Berwyn. Evanston. LaGrange. LaGrange Park. Riverside. We sell condos, single family homes, lots, land, multi units, two flats, three flats, etc.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Buoscio’s personal views and do not reflect the views of Better Living Realty – Buoscio Brokerage, Inc.. This information on avoid this mistake on your financial statement is provided as a courtesy to our viewers to help them make informed decisions.