Home Selling in Houston>Question Details

Rachel, Both Buyer and Seller in 53717

How to buy self out of underwater mortgage when selling?

Asked by Rachel, 53717 Tue Jul 24, 2012

Due to loss of value, we owe more on the house than the current market is worth. We need to move for new jobs out of state. We have a buyer willing to pay less than the mortgage (buyer will pay market value). We have the cash in our savings to cover the deficit. We are not planning to do a true short sale.
My question is, how/when is the best way to pay this? We don't want to pay until the buyer is locked in (keep our money in our account, not in the mortgage) but we were told that if we bring cash or a check to the closing table, the bank still might record the sale as a short sale against our credit. Our plan was to wire the money to the mortgage (we use a different bank for out savings) 3 days before closing.
Does this sounds good? Does anyone have experience with this? Our Realtor has no clue.

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Answers

5
It isn't uncommon at all in this economy for a seller to be in your position, and i've never heard of it impacting the seller's credit to bring money to the table to close. A short sale comes into play when a seller doesn't have the money to bring to the table. Then they negotiate with the bank to accept a lesser amount to pay off the mortgage.

I can't imagine that this could count against your credit in any way. You've paid a debt you owed. Congratulations on being in a financial position to bring the cash. Many, many sellers are not so fortunate these days. I'd count that as a success and move on!
0 votes Thank Flag Link Wed Jul 25, 2012
2 things:

1. You may need a new agent, this isn't too difficult of a question.

2. Tim is right. I see no reason why the bank needs to know that you're bringing money to the table. All they know is at the end of the transaction they get paid in full. The Escrow Company/Escrow Attorney will write up a settlement statement that will tally up your debits and credits and give you a final figure that you will bring to closing. Meaning that you don't have to come up with money out of pocket until the buyer's mortgage (or cash) has been received. If you are paying the note in full, there is no reason to believe they would record it as a short sale.

Keep in mind that your contact at BOA may have no clue what they're talking about.
0 votes Thank Flag Link Tue Jul 24, 2012
More info- The bank (BoA) doesn't know. I spoke to 5 people and one finally said he thought 'it'd be a good idea' to pau before closing. BoA previously told us if we brought a check to closing, it might be recorded as a short sale.
0 votes Thank Flag Link Tue Jul 24, 2012
I have done a couple of these in the last year. You will need to give the money to the company or lawyer that closes the deal for you. No need to really explain to much to the lender since they will be paid in full at the closing with the addition of the certified funds you will give to the closers. I would explain it all to the lawyer or company that closes it and they will verify funds needed to pay off the loan.
0 votes Thank Flag Link Tue Jul 24, 2012
Have you attempted to contact the bank directly to ask them how they would record it?
0 votes Thank Flag Link Tue Jul 24, 2012
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