AW
My recommendation is to carefully read the preceeding post, then meet with a Realtor and discuss options.

The only way you can qualify for a short sale is to have a "hardship case", and you do not. However, talk with a Realtor about your needs to see what options you can develop. There is more than one way to skin a cat.

Aw

The short answer is NO. Fannie and Freddie have recently changed there guidelines to state that they will not finance a hme if you have had a short sale within the last 2 years. Some lenders have even pushed it to 3. It may be better to use part of your savings to buy a new home and rent out the old one until the market comes back.

Christopher Lyon
Mortgage Broker

No. Credit will be adversely affected. The only way you can get out of the home with your credit intact is to sell the home and come to the closing table with your personal funds to make up the difference between what you owe and the sale proceeds.

Normally a lender would not agree to a short sale if you have the money to make up the difference. They're not going to bear the burden when you are perfectly capable.

Even if you can somehow work something out with the bank where your credit scores to not take a hit, lenders treat a short sale the same as a foreclosure when you are looking to get approved for a new mortgage. So what that likely means is a 2-5 year waiting period before you could get approved for another mortgage.

Your lender will want to know why you trying to short sell your home, and you will be required to provide them a hardship letter explaining what happened or why you need to sell. It's important for you to contact your lender directly and explain your circumstances. A short sale will affect your credit rating. You will not be able to get a new mortgage loan right away. However, if you do everything right afterwards, you should be able to bring up your credit score to qualify for a new loan within two years. I seriously doubt that your lender will allow you to keep your savings. Signing a promissory from your lender would be a condition of their approval of the short sale, and at the same time, will increase your debt -- it may not necessarily help you with your credit rating. Consult with an attorney first before signing any promissory notes from your lender as a condition of the short sale.

There are a lot of factors to consider and the answers to your questions will vary depending on the policies of the lenders. But the most likely scenario is that the lenders would expect you to bring the money you have to the table to make up the difference in the short sale, especially since you have a second mortgage. In my experience the promissory notes you refer to are offered to people that are not in a postion to pay now but want to preserve their credit scores. Furthermore, I think most banks would question the logic of buying a larger (more expensive?) home without paying off what you currently owe.

You can always try to negotiate with the lender, if you are in a position to make substantial monthly payments on the note in addition to your new mortgage. For instance, if you used the same lender for the new mortgage and you were putting 20% down, it may possible, but I haven't heard of promissory notes being used in that way. Perhaps someone else here will be able to respond differently.

The lenders will want money. Checking, savings, they will even look at your 401k when considering a short sale. You cannot go through a short sale without taking a serious hit on your credit rating. It's doubtful that the lender will accept a short sale if you have the ability to pay.

Please talk to your accountant, your mortgage lender, your banker, and your realtor before making a decision. You need to know what your house will probably sell for, how much a larger house will cost, what kind of loans are available to finance the purchase of the new home, what your present lender is willing to do, what another lender will be willing to do, what your bank is willing to do ... there are a lot of unknowns and you will likely have more questions before you can reach a good decision.

Good luck to you and your family.