Can the lender come after a new property we are looking to finance with a 401K withdrawal, before our existing home is foreclosed on? (see detail belo
We are currently in foreclosure on our existing home, but too upside down with a second mortgage to finance a business (which has since closed) and $25K plus of repairs to make, to try to save this property. We are considering taking a withdrawal on our 401K to purchase a small condo and wondering what the consequences will be, other than taxation and early penalty withdrawal. Not sure if the lender will accept a deed in lieu of, and working on getting it listed as a short sale now.
Alice, I agree with Minna's answer. It is very important to start the short sale process as soon as possible. You will need to contact your bank to get the specifics of the process they require. To be successful you may need help navigating the process. Feel free to contact me with any questions at 904.608.0016. Good Luck!
Despite how you pay for the new property, the old lender can pursue you for a deficiency. This debt can be attached to the new home. Best to settle with the old lender before acquiring other assets.
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