Financing in Holly>Question Details

Moxeylady, Other/Just Looking in Lamasco, Evansville,...

How can we get out of our current mortage even when our home is valued at less than we owe?

Asked by Moxeylady, Lamasco, Evansville, IN Mon Oct 1, 2012

My husband is currently unemployed and his unemployment will run out next year. At that point he will have to get a job fo rless than what he is making now...He also has health issues (cancer survivor) I am the only one employed but based on my salary alone most homes on the market would have a lower mortgage and would not have the repairs needed that are current home must have. Something we cannot afford at the current time due to our income. Is there a way we can get our of our current mortgage and purchase another home that is less costly. We are getting older and woudl prefer something all on one level as well

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Yes it sounds like you are a perfect candidate for a short sale. I hope you have been able to find an agent to help you. Please make sure they are certified in short sales. Feel free to email me and I can help direct you in the right location.
0 votes Thank Flag Link Sun Oct 14, 2012
Depends on if you have equity in your current house. If you're underwater, a short sale might work in selling it, but you won't be able to purchase a new house.
0 votes Thank Flag Link Mon Oct 1, 2012
if you can hold on long enough to sell the home without missing any payments, you could qualify for a new home with only 3.5% of the purchase price for a down payment. It is key that you don't miss any payment though. If you would like to speak further I would be happy to assist you.

Joshua Lerette - Sr. Loan Officer
Residential Finance Corp.
0 votes Thank Flag Link Mon Oct 1, 2012
It's possible if you do a short sale on your current home. A short sale is where you sell your home for less than what is owed on the mortgage, and your mortgage lender also agrees to forgive the difference between what you are selling your home for vs. what is owed on the mortgage. Most of the time you are required to be behind/late on your mortgage before a short sale would be considered by your mortgage lender, however I have seen people who haven't gone late on their mortgage be allowed to do a short sale if there are extenuating circumstances - such as your husbands health issues and being on unemployment.

After the short sale, most lenders won't lend to you for a 2 or 3 year waiting period, as a short sale is a negative event in the eyes of a new mortgage lender. However if your payments are all on time for the 12 months leading up to the short sale, including being current when your home is sold, then an FHA mortgage will allow you to qualify for a purchase 1 day after the short sale (i.e. no waiting period) as long as you aren't buying a similar or superior home in the same commuting area for a lesser price. So if you were going to downgrade to a smaller home, that would be permissible.

Not all FHA lenders will permit that though, each one can have different guidelines. And so if doing a short sale and buying with FHA financing afterwards is your plan, I would make sure you have been pre-approved to purchase a new home based on those FHA-buying-after-short-sale guidelines as part of your preparations. Mortgage guidelines also can change without much notice, so to be safe you should also make a Plan B in case you have to rent for awhile before you could buy again. Also keep in mind that a short sale can damage your credit score after it is reported to your credit report - I have seen anywhere from just a few points lost (like when someone never misses a mortgage payment) to a couple hundred points lost (when there are lots of late payments leading up to the short sale). So planning on doing a short sale and purchasing afterwards definitely has some risks.

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes Thank Flag Link Mon Oct 1, 2012
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