Before considering a short sale, ask yourself why you have to sale. Do you have a hardship that prevents you from making the mortgage payments. If you do not have to move, I would suggest holding on to the property as the market will eventually come back. I would also suggest you consult with your tax accountant and your attorney before making a decision. If you decide to proceed with a short sale, contact an agent who is experience with both short sale and your market. An experienced agent is a must. Take care,
Cynthia Alfred, Realtor
You got some answers from fellow agents and few bad advices "not to pay mortgage". Now, you have to decide what do you want to do.
Before doing short sale, consult with CPA or tax attorney for tax ramification questions.
When you decide to short sale then work with an experienced short sale agent, not all realtors are good in short sale.
Stupid, stupid stupid.
I do understand that the interest on the 90k is meaningful but since you will be renting for a few years the negative is offset. It's also offset by the mortgage interest deduction.
So long as you can afford the home, I advise you stick around. Short sales are growing uglier and uglier and our companies attorney are starting to see the banks start to chase deficiency judgement against people where they can. If you are converned about the interest. make double mortgage payments if you can afford it. Check the math, it will amaze you.
If your preference is to remain in the property, then try to negotiate a loan modification.
Question - if the property went UP in value by 20%, would you be trying to find a way to give that appreciate to the lender?
No, of course not. Markets go up, and they go down. IMHO if you like the house and do not need to move, either tough it out like most of us, or try for a loan mod. BTW, you'll need to demonstrate to the lender that you DESERVE an adjustment. Just because the value dropped alone is not sufficient reason for the lender to approve a loan mod.
I can understand why people might not want to pay their mortgage, and we should explain the upside and the down side to them, but there is incredible legal risk, financial risk, and other risk. This is both to the home owner and the agent providing them the information. Furthermore you are in Oklahoma. All Real Estate is local. I live in Brentwood. Now we are in an up market, the bank owned homes are in short supply and if you need to short sale it is a good time. But I do not know who his mortgage lender is and cannot give tell him how they might react. Also I have not looked at his home to do an evaluation. If this market bounces back he may only be a few years away from having equity.
Generally speaking the short sale will not hurt you as bad as a foreclosure. As things stand now you could buy a new home in two years.
A lot of it depends on who the lender is. YOu also need a "Hardship" like loss of job, need to move, disability, etc. . . What a hardship is varies from lender to lender.
I have information at ShortYourHome.com
Other points to ponder...
Real estate is a long term investment. If you can afford to make your payments, and you enjoying living in your home, tough it out and stay put.
If your home was worth $500,000 now, would you be selling?...likely not, because if you sold you would simply have to buy back into the same market so you wouldn't be making any "profit".
Good reasons for selling would be: "you lost your job and cannot afford your payments", or "you are moving out of the area."
Having good credit has value..it is worth protecting.
One thing many sellers do not realize is you will not be approved for a short sale just because you don't want the house anymore or want to sell it just to get rid of the monthly payments.
You must demonstrate a financial hardship, such as loss of job, income, etc. Also, if you do have money available, the lender will less likely not approve a short sale. So, you basically need a dire financial hardship and are doing the short sale to avoid a foreclosure.
If that is your situation (financial hardship and trying to avoid a foreclosure), you can consider a short sale. If that is not your situation, and you don't need to sell, you can just keep your house, keep maying the payments, and not damage your credit.
Remember the value of your home only matters when you go to sell it.
Security Pacific Real Estate Services
Can you continue to make the mortgage payments? (If no, sell. If yes, go to next question)
Would you like to live in the house for the next five or so years? (If no, sell. If yes, go to next question)
Could you manage the damage a short sale (or foreclosure) would do to your credit? (If no, don't sell)
Finally, if you can not continue to make the mortgage payments, it is possible that a loan modification would give you that ability. if that's something you want to try, beware of scams. Do not pay anyone any money up front. I can refer you to a licensed real estate broker with 30+ years experience on Contra Costa County, who will not only go to work with no up front money, he will not charge anything unless the loan modification is successful.