Upside Down Mortgage

Posts Tagged ‘homeowner’

Mortgage Relief Help

Question: Does the Mortgage Forgiveness Debt Relief Act apply to short sales?

Hi - I am considering entering into a short sale of my townhouse, but I was wondering if anyone can advise me on if whether or not the Mortgage Forgiveness Debt Relief Act 2007, applies to the difference between what I purchased the townhouse for in 2006 and what it will ultimately sell for (much lower) in 2008? Thank you in advance!

Answer: Yes, the act would apply to you. However, the act applies to the amount of debt forgiven, which is not exactly the same as the purchase and sale prices.

For example, let's say you bought the house for $200,000 but took out a $195,000 mortgage. By now the mortgage has been paid down to $193,000. However, the house is now only worth $160,000 so that is how much you do a short sale for. So the amount of debt forgiven would be $193,000 minus the $160,000 the bank received, or $33,000.

Also, keep in mind that the act only applies to debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

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Mortgage Help Homeowners

Question: What is difference between Mortgage Insurance and Homeowners Insurance?

Thanks.
So are you saying that with the mortgage insurance...if I die...my house is paid for. My wife can live in it and not pay mortgage?

Answer: Mortgage life insurance is limited life insurance that pays off the loan balance if you die.

Private mortgage insurance (PMI) or FHA mortgage insurance protects the lender if the borrower defaults on the loan.

Homeowner insurance consists of liability and property protection.

Totally different things. Which kind are you talking about?

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