The best option for selling when you are upside down on your mortgage is to go through the HAFA program. This is a federal program designed to do less damage to your credit than a traditional short sale. To qualify for the program you must have a high debt-to-income ratio, meaning your income barely covers or doesn't cover your monthly expenses, you must prove financial hardship, and you must submit various documents such as your tax returns for the past 2 years, and some other application forms. If you are accepted, you are guaranteed not to have a deficiency judgement placed against you, which is when the bank makes you pay back the difference between what you owed on the property and what it sold for over many years. Often people don't realize they are going to have a deficiency judgement placed against them until the short sale process is coming to a close, they've gone through the whole process, and there is no turning back. That could happen if you do a traditional short sale. That is why I recommend the HAFA program. No matter what anyone says, though, do NOT stop paying your mortgage and go into default. This will really destroy your credit. Go through the HAFA program, or rent your home out and hire a property management company to manage your rental for you. Good luck!
The KUHL Team
Buy and Sell Smart Realty
The situation which you describe would apply to a large segment of homeowners today. The solution to your issue depends on your situation.
1. Is a hardship present or inevitable?
2. Do you have savings of any kind?
3. Approximately how underwater are you?
4. Income to debt ratio.
5. If relocation is required by employer, they may have options that have not been discussed with you.
Assessing your situation will reveal what your best options are.
1. Sell home and come to closing table with a pile of cash to satisfy mortgage balance. This leaves your credit in tact but has significant ramifications on any down payment available for new home as well as financial stability on your new location. There is always the option to rent in your new location from another underwater homeowner who can not sell.
2. Based on #3 you may consider owner financed sale.
3. Rent existing home (this may influence mortgage qualification in new location)
4. Short sale
Consult with your accountant, financial planner or attorney regarding the plan most beneficial for you. Listen very skillfully what is shared with you behind those closed doors.
Best of success in your relocation.
Here are my thoughts regarding your situation.
- If you have a financial hardship which it sounds like you inevitably will once you move back to MI, consult with a Realtor who does short sales. I would also be sure to consult with an attorney to see if this really would benefit you in your current situation.
- Another option would be to sell the home and bring cash to the closing table if this is an option.
- My last option (which I have personally done) would be to rent out your home in Marana and then purchase one when you move out to MI. We have a house that is leased in Austin, TX and are about to purchase a home in here Colorado. This may not be the best option but is definitely workable if need be.
REALTOR, CDPE The Elite Team
Your Castle Real Estate
(720) 988 5952
Another option, though I am not sure it is a very good one, is to rent your home in Arizona. It's difficult to manage when you don't live nearby, however and so I am not sure I would recommend it.
Talk to a mortgage lender and talk to an experienced real estate agent. Look for the SFR designation. The combination of those two professionals should give you the guidance and advice you need.