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Ducksoup18, Home Buyer in 55122

Short Sale Townhome After Buying New Home

Asked by Ducksoup18, 55122 Thu May 7, 2009

Im looking at buying a new home with my fiance before we get married. I currently own a townhome, but if we put the new house under my fiance's name then she should still qualify for the $8k tax credt. My real question is, after we buy a new home (we have already been pre-qualified for the a specific amount. This amount also takes into consideration my current mortgage) could i short sale my townhome if it came to that? I understand that it all depends on whether or not the banks will allow a short sale, but i figure i would ask the experts.
Thanks,
Jake

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Answers

7
That's a fine line between black and white, maybe that grey area so many people want to float around in. Short sales are all the rage and you have to prove that you cannot bring funds to closing. Banks will check everything when it comes to short sales, don't think of this as an easy way out.

Why not just wait until your sell your townhome?

You're best bet would be talking to an accountant or if seek legal 'expert' advice, chat with an attorney.
1 vote Thank Flag Link Thu May 7, 2009
This question comes up quite often. You may have many different options but your ethical obligation is to follow through on the contract you made with your lender, which was to make payments until you pay it off or pay off the lender in full. Asking the bank to take a short sale in this situation is simply deciding to cheat them & society as a whole. It's just not right.

Beyond the ethical issues, you will hurt your credit for years to come, which could lead to higher rates on other loans and credit cards. Plus, you really need to speak to a tax advisor regarding how the tax credit works in your situation.

Congratulations on your upcoming marriage, but at the same time do the right thing and own up to your financial obligations.
0 votes Thank Flag Link Thu May 7, 2009
Jake, I think you and your spouse-to-be should just wait another year or so. Keep up your payments, build equity and you will see home values rising. At that point, you can sell to your benefit and buy a larger home that might need some improvements which would give you some advantages. If you feel compelled to buy before you sell, you will find that whatever is going on in the market it is a risk. In any market, there are many more choices open to you when you do buy.
0 votes Thank Flag Link Thu May 7, 2009
This is called buy and bail when it involves a foreclosure and lenders have really cracked down on it. Under these circumstances I seriously doubt your short sale would be approved. in order to be approved for a short sale you have to prove real hardship such as job loss. just wanting to buy another house probably won't get it.
0 votes Thank Flag Link Thu May 7, 2009
It's tough, an all to common story going around that I hear almost everyday it seems like. I think you know what you have to do, I (and many others) are not in a position to probably give the strongest advice on this situation. If someone does, be very careful and listen or run for the hills.

Send me a link to the property you have listed. I grew up in Eagan and work the south metro, I may have some buyers at some point down the road or least be aware of the property.

Best of luck.

My contact info can be found in my profile information.
0 votes Thank Flag Link Thu May 7, 2009
There are many aspects to the answer to your question. A VERY long e-mail. I'd be happy to give you my take on your situation. Please contact me via phone if you'd like.

Charlie
0 votes Thank Flag Link Thu May 7, 2009
Thanks for the reply Jason.

Yeah im just looking at my options here. I talked to a realtor and he mentioned that it could be an option. I personally dont like the idea of it, but i figure i'd do some research. My stepmom is a mortgage broker and im sure she'll say 'no way' and i emailed my brother inlaw who's a CPA to see what he thinks, but overall im just trying to find a way to get outta my townhome asap. I havent completely put it on the market yet, but am planning on doing it soon. I have it up on craigslist, zillow, etc as a FSBO, but i have only gotten one email showing interest. The problem with my townhome is that when i bought it in 2006 i paid quite a bit more than what its worth now, and between then and now the townhome association seems to have taken a turn for the worse. Poor tenants, foreclosures, association not taking care of things, etc. I just want to get outta there and am trying to figure out a good way to do it. I can take about a 10-15% hit on if i was able to sell it, but i would lose almost all of my savings. On top of that, my association doesnt allow for renters, so i cant just rent it out. Any other ideas would be greatly appreciated. It really sucks because i have never missed a payment and have done a lot of upgrades to the place, but i have a fear that it just wont sell. Im doing all the right things and i might be stuck!

Thanks again,

Jake
0 votes Thank Flag Link Thu May 7, 2009
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