Thread: Short sale or make primary residence

Originally Posted by arik

I have an interesting situation.

In 2005, I bought a house in Florida for $450,000. Ever since I was able to rent it and had to put in about $800 a month to cover the mortgage/taxes/etc... Not so bad.

Recently, my tenant has left and now the house is vacant. I have decided to move into the house with my family.

My situation is as follows:

The house is now appraised (yes I got it appraised officially at $220,000). That is very unfortunate. Originally I have put down $100,000. My mortgage balance is $330,000. Therefore, I am upside down in that the house is worth less then the mortgage.

Question:

Should I short sell the house and loose my $100,000? And then buy another house in the area? Or should I just live in the house and then stick it out for several years hoping it will go back up.

I appreciate your help and answer in the matter.

If you use a short sale you will not be able to get a loan for some time.

It sounds like you have assets and are not having a problem making payments. If so, you will not qualify for a short sale or at the very least the lender will want to to pay back the difference in price.

If you can afford to stick it out then that is what you should do.

Greg,

Thanks for the time to reply.

I don't really have assets in the bank. Actually I am in debt a lot... I am currently current on my payments, but I do not think I can go any further.

I actually have been presented by a buyer to buy my house for a short sale. I was thinking of presenting this to the bank. Do you think they will approve the short sale if I am on time with payments? Or shall I stop making payments?

Greg is right you will have a ding on your credit for a while. A short sale is not as bad as a foreclosure but will still lower your credit. If you do decide to stick it out with the bank try to re-negotiate the loan and get the interest lowered if you can. It never hurts to ask the bank if they will do it.

Check out the government site Making Home Affordable

Be very careful regarding companies or individuals saying they can help you, there are sadly many scam artists out there.

It would probably take some time for the market to come back from your current appraised value to your loan amount. So if decide that route you should be prepared to wait.
Yes, you could have some difficulties getting a new loan if you short sale. Although it is usually the deliquent payments that seem to hurt people the most and not actually the short sale itself. You can short sale without stopping your payments, although banks don't seem as motivated to get the short sale pushed through while you are current.
I would see if you possibly qualify for purchasing another home while you currently own the other one. You may have to show that it is tenant occupied with income coming in order to. It all depends on your financial situation. Banks have also made it much stricter to buy homes if you own another one. They call it the "buy and bail". The owners buy a home then let their old depreciated one go to foreclosure.

Since the purchase was made in 2005, it may be to your benefit to consider refinancing. Talk to youre lender and see if it would be beneficial. Also, i agree with the previous comments. I would suggest you try your best to stick it out. I am not sure what the living arrangements with your family are like, but remember theres always the possibility of renting out part of the house even when youre occupying it. Good luck.