What is the general process a seller must go through to get their house sold through a short sale?

How long does it take before they can actually sell the home?

How does it affect credit and taxes?

How long before the seller can purchase a home again?

Talk to your lender, they set the process.

In general it does not effect your credit since the lender is accepting the payment as payment in full.

You will need to prove to the lender that you can not afford to keep paying the rent. There will be a detailed application where you show all your money, income and debts.

But on top of that, there has to be a buyer, who is willing to make an offer.

There is no requirement that they accept the short sale,

I have seen a person make a offer and it take 3 to 4 months for the bank to make a decission. They may say no, also

You can go out and buy a house the day after you sell this one, but why ? You are proving you can't afford this house, so how can you then affored another house.

Talk to a REALTOR that specializes in short sales in your area. He/she will want to list your property at close to or slightly below market value depending on your circumstances and the amount of time you have to sell prior to a foreclosure or other event. You will have to provide paperwork to the Lender and show that you have a financial hardship that prevents you from paying the loan in full (e.g. medical hardship, loss of job, new job in a different community, lower wages, less hours, etc). The same type of paperwork that obtained you a mortgage will get you out of the mortgage... bank statements, pay stubs, copies of tax returns, and them pulling your credit. The bank will not normally do a whole lot for you until you have an offer. Usually what happens is that you list your home for sale at a price that will sell. You accept an "as-is condition" non-binding type offer on the property subject to the bank's approval. Your REALTOR forwards the offer to the bank for their approval with the other documents. Your REALTOR calls them daily until your file is assigned to a Negotiator. The Negotiator loses the file/or their job or goes on vacation and it is assigned to a 2nd Negotiator who dispatches an appraiser to the property. The Negotiator reviews the appraisal and weighs the costs of foreclosing on you verses what they can obtain by leaving things the way they are. To foreclose on you a bank will often spend $10k-$20k and then have to maintain your property (and sell it in a vandalized condition). Your mortgage company reserves the right to 1099 you for the difference in what you owed verses what you sold it for. I have never seen this happen. I would suggest you discuss tax consequences with a CPA (you want necessarily know what your consequences are until you receive an offer). Most Mortgage companies require that you list the property in the MLS so that they can get the greatest return for their investors. You will not be able to sell the property to a family member or sell it to someone that will rent it back to you. If you have a 2nd Mortgage, property taxes, or additional liens these too can be negotiated as part of the sale by a competent Realtor. You will lose any money in your escrow account to the Mortgage company. FYI the REALTOR commission is paid out of the proceeds of the offer... so you are not on the hook for those expenses out-of-pocket. BEWARE: Don't be a guinea pig of a REALTOR that has never completed a short sale. A REALTOR that has done these things should be able to have you contact previous clients that you should talk to that will tell you about their specific circumstances and how things ended up for them. If you have additional questions ask away.

You will be able to afford another home once your credit score has recovered sufficiently depending on your circumstances (e.g. Not paying your mortgage and selling short vs paying your mortgage and selling short). Score should be approx. 620+ (now)

Thanks my biggest concern is if I will ge a 1099 for the difference. Ill check to see if I will be subject to that.

Have your CPA review HR3648 and see if it applies to your specific situation. You can read more about it at: http://www.irs.gov/newsroom/article/0, id=174034,00.htmlhttp://www.irs.gov/newsroom/article/0, id=174034,00.html. Good luck!