You are not alone. So many people are in your situation whether it be a job transfer, divorce, new child or another reason that a seller MUST move but they are in a position that won't allow for an easy sale or refinance. It really can appear so unfair to the hardworking, credit worthy individual like yourself.
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.