What You Owe On Your Home – Are There Hidden Costs?

The definition of a short sale – selling your home for less than you owe on it. But what do you really owe? For an Arizona short sale, there is some hidden debt involved. It’s something that few people contemplating a short sale think about. You may owe more on your home than you think.

  • First, you have your primary mortgage and any delinquencies and interest that may have been added to that. That’s what you are thinking of when you think “mortgage debt”. But there is so much more.
  • Do you have a second mortgage on the home? The second mortgage holder must also agree to the short sale. Add that second mortgage or any other liens you may have on your home to your balance sheet.
  • Do you belong to a homeowner’s association? Are you behind on the dues, or will you be behind by the time the short sale goes through? The HOA fees that are unpaid are considered part of the debt as well.
  • What about your property taxes? If you are behind then add that amount as well.
  • Don’t forget the costs associated with the sale. Will the lender require that you pay the closing costs? Some do and some don’t. Sometimes the buyer will agree to pay, but you have to be prepared if they won’t. Are there escrow fees or brokerage commissions that the seller must pay? Add these to what you owe.

Finally, after figuring all these factors in, you are ready to prove to the lender that the home is worth less than the unpaid balance of your debt. For that, you need to consult a real estate professional knowledgeable in short sales and get an estimated appraisal of the fair market value of your home.