Your loan on the condo is probably a 30-year loan. Let's assume no interest for the moment. $325K / 30 years = $10.8K / yr. A personal loan would probably be calculated at 5 or 10 years. (Let's say 10). $325K / 10 years = $32.5K / yr. So, you would be required to pay more each month. That increases your total monthly debt payments which in turn will reduce what you would be allowed to borrow for a new property.
Your interest rate would also be substantially higher because a personal loan is not secured by real property.
First of all, considering a short sale is a extremely bad idea from a credit stand point which will obviously affect your qualification for a loan. Ask any lender or do a search on the effect of a short sale on your credit and you wil find that it is almost as bad as a foreclosure and stays on your record for 4-7 years.
What you didn't mention was, the type of loan that you have...30 year fixed or others...
I would not advice getting a personal loan for a down payment....they are very expensive
From a home purchase stand point, consider your job security first before making the leap. It is very tempting to move up into a larger of better home in markets such as one we are currently in. My biggest concern would be that over leveraging yourself can lead you into more trouble. You should ride out your current situation, be patient...markets do change you know....
One third of the value is tough to swallow. Some questions. Are you the type to atone over and over for
imagined sins? Will you beat yourself forever if you short sale (even if you pay off balance) and then
the market returns with a vengence and you lost that investment? Or, are you loaded with cash and very
devil may care? Can you stomach taking your loss, never look back and move on? That's the first important question.
Secondly, you may not qualify for that bigger mortgage in this climate with guidelines tight and the required down payments growing larger. Be sure to get a loan committment from a lender in place and one that you can renew the "lock" on the terms in case you can't sell the condo. It's never exclusively about
money if it's your home you are talking about.
Could you rent the condo? Then you could do a 1031 exchange later
into something income producing. What is driving you? Examine your motivations. Then talk to a lender.
Most of the people I know, including myself have a house worth less than what I bought it for 2 years ago. What ever decision you make, hang in there. Remember the market is cyclical.
You are in a difficult, though, not uncommon situation. You could try a "short sale' (See my link on short sales that follows). http://www.chicagotitlesd.com/december05/ShortSales.pdf Since you seem to be an owner occupied property, you would not have to pay for debt forgiveness (1099 IRS Form). Condos, unfortinately, again are in excess, though, yours may be a more entry level one and therefore more appealing to buyers. You might contact your lender to ask for a note modification or forebearance ( see following link for information). http://www.hud.gov/foreclosure/index.cfm
I can refer some excellent Realtors to you if you decide to sell via short sale. You could talk to an attorney about whether you should try the personal loan to protect your credit. The real estate market will eventually turn around, so keeping your condo as your home may also be advisable. Please call me if you want to talk more about this.
If you need a really good one please let me know
First Team Real Estate