Thread: Upside Down in House - What are options?

If the bank finds out you are moving they won't make the loan for the second house. So, as long as you can keep your job transfer secret you might pull it off. If you pull it off you might be committing loan fraud by lying to the new lender.

Another option is to rent out your old house until the market improves.

If your income supports buying another home - then why not rent out the house - buy the second property and stay current - being upside down is unfortunate but all things change with time - If your income does not support both homes then a short sale may be your best option - it sounds to me like a call or visit to a good attorney or cpa may be in order - all of the options you present will have an impact on your credit - and remember many things in life are credit score driven - those will be affected by a change in your credit score.

This market has unfortunately affected so many innocent people. Rules change by state, but generally most allow for a second residence. I'd make arrangements to buy the second home first, then deal with the present home. Either by renting it - or arranging a short sale (but this will affect your credit.) Given the market situation, banks are urged to work with people in your situation. They may be able to re-work your loan to get the payments lower -- thereby making it easier to rent. Wouldn't tell them anything about the rental - or they won't work with you.

You are in a spot that many of my clients have found themselves in. Setting the moral questions aside of right and wrong, and thinking of this purely as a business decision much as a lender might do I would do the following:

Talk to your employer and ask if there is assistance from them in your move. In other words a relocation compensation package that includes the sale of your house. That is one possibility.

Talk to your loan officer to make sure you can even get a loan. If you can't you might ask them what if you rented out the home you are in. This theoretical income might make you qualify. It might also be beneficial to your future if you were able to rent it out. If you weren't able to rent it out after you moved or if it continued to cost you money each month you might consider short selling it later on.

Whatever you do, do not just "let it go to the bank". In my state there are protections for you and most note holders such as fannie mae etc have programs that help you avoid foreclosure through a short sale or other option. This can save your credit big. It will also help later on when you have to explain your credit if you can show you did everything you could not to be foreclosed on.

Joe

Originally Posted by tamen

Hi!!! I am sure this question has been asked before, however I was not able to locate the information.

I am currently upside down in my home (worth less than half of what I owe) and am not behind on payments and have no problems making payments - however I do need to move due to job relocation.

One possibility, however I am not sure what impacts there are... is to purchase another house and let the current one go back to the bank. I have enough down and can secure a second loan to purchase a second home - however I am not sure the best way to determine the impacts?

If I buy a second house as a "investment property" can I move into it and let the first home go back to the bank? What are the impacts to doing that (other than the credit hit, which I am fine with).

Before I contact the bank or start any kind of foreclosure or short sale process, I wanted to ensure I could secure another loan - so just in the initial stages of research... If anyone can give pointers that would be great~!!