As there are those of us who once sat on a goldmine of equity in our homes, taking out seconds and third mortgages to capitalize on that equity by spending, spending, spending, now we are having to look at the other side of the coin which includes loss of equity, depreciation beyond their loan balances and over extending themselves to the point that a refinance is nearly impossible due to their now inflated debt ratio coupled with their lack of adequate home equity.
Please understand, I am in no way referring to you in any specific manner. So many of us have become insolvent due to the lending institutions and decline in market values. But what about the seller that has made every mortgage payment on time, has good credit, savings in the bank and continues with good, steady income? I can only assume that the lenders believe that since we rode that high wave of prosperity we should now be prepared to pay it all back as if we are equipped with deep, deep pockets ready to restore the coffers with all that golden prosperity.
Because you are not destitude with a hardship story, poor credit and zero reserves to rely on, it will be very difficult to convince a lender to agree to a short sale. If the lender were smart they would agree to it all day long. Lenders are not in the business of owning real estate, they make loans. Lenders need to accept that the market has left many of us in your exact situation and cooperate with a viable sale transaction even if it means accepting a reduction in the principal balance of the loan they provided you. (playing devil's advocate now) But why should they be the ones to bridge that gap between what a buyer is willing to pay and the impending loan balance when you have shown that you have capital on hand ready to pay down your mortgage to qualify for a refinance? Obviously you are not involvent. The lenders won't help those who can help themselves.
To protect your credit, which I can imagine is very important to you, a short sale is not only near impossible to obtain but detrimental to your credit history for years to come. A consideration would be to lease your home out for as much as reasonably possible to be applied toward your current mortgage payment and pay out the short each month until the market changes and you can once again sell it for more than the mortgage. That day will come. Anything other than that will ding and bruise your credit worthiness and that seems to be all we have to hold onto at this point. If your credit is not important to you then you could simply walk away from the home and stop all future payments hence, foreclosure. It is truly an impossible dilemma that so many have to burden. So sorry. Best to you.
You can try renting out the property.
You can give the property back to the bank, which is not great for your credit, but it is better than if the bank forecloses on you.
I would probably first speak with the bank or have your Realtor speak with the bank and find out your options. Good luck.
I would stop putting money into the house immediately and consult a short sale specialist and/or a loss mitigator to assist you.
GZood luck - it's tough out there but this can be done!
I personally do not like lease/options. I haven't seen this question for you. Have you already purchased a home where you are moving? A relocation would be considered a hardship and a short sale may be possible. However, if you haven't purchased a new home a short sale will make it difficult to qualify for a loan. I would consider an all inclusive trust deed (AITD). If you have an agent ask them about this. If not feel free to contact me.
However, since you have cash, you might consider just cleanly resolving the issue now. Figure out how low you can afford to go--how much cash you have to bring to closing--and aim for that figure.
Another option is offering seller financing on the property. Rather than a lease-option, sell the property but offer attractive seller financing.
Another option is trying to find another lender, one that will refinance you.
What you really should do at this point is talk to a financial planner or an accountant--one who can look at your finances and your tax situation and provide some guidance on what strategy (sell immediately, hold, then sell, etc.) is best for you.
Here's a creative suggetion.... Talk to your agent about offering the property as a lease-option. I would advertise on Craigslist and similar websites. Advertise it as a lease option opportunity for credit challenged buyers (those with cash available but low credit scores). You can require a size-able down payment (2-3% of purchase price). You would then rent it at an increased rate and agree to have a portion of that go towards the purchase price. So.... for example, let's say the average rental rate for that type of property is $1500/mo. You could charge $1900/mo and agree to have the overage of $400 per month go towards the lease-option buyer's purchase price of $290k. This will get you out of a negative cash flow situation. You require the buyer to clean up their credit and purchase the property within a certain time period (typically 1-2 years). If they default and do not purchase you get to keep their initial deposit and find a new lease-option tenant... or sell the property at that time.
I hope that's not confusing.... ask your agent for further details. If your agent is not well informed as to lease options I would look at finding an agent that is.