Selling home and market is not moving. I am on an arm rate that just increased again. We are not in a not in

Asked by Jb Miller, Tampa, FL Sun Nov 11, 2007

a situation where we can lower our rate again (with out still owing on our home). We are being transfered to another state. Would a short sale or short refiance work for us to get out of the home? Also what would that do to our credit in quailfying for a new home in another state? Currently we can still pay on our mortg but now sure how long since it just changed again.

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Jb Miller, Home Seller, Tampa, FL
Mon Nov 12, 2007
Thank you all for the great replys. We don't have to be transfer until after the 1st of the year and the relocation dept of the new company is paying for our move...other than that. Our home has been on the market since July with very little traffic. The price as already been lowered at least once and I am afraid that is all we can manage. We are looking into the renting as an option and our current real estate company handles that aspect as well. We both have excellent credit and do not want to damage anything if we can at all possibly help it. We will be talking to our current lender about refiancing and see were that takes us.

Not to mention.....someone is coming to look at the house! Fingers are crossed. ;-)
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Isaac Bensus…, , 92037
Sun Nov 11, 2007
I am sorry you are facing this bad situation. As a consolation, you are not alone. I would investigate what is the maximum amount your payment can go up to. I would also investigate was is the rent I can get for the house. Calculate your maximum mortgage payment, property tax and insurance; maybe water and 5% management fee and then substract the rent you could obtain for your house. I am sure you will come up with a big negative cash flow. Can you afford this negative cash flow? If you do, maybe you should keep your house. I'm still not convinced if a short sale is better than a foreclosure because lenders have many different ways of reporting short sales. Some can cause a devastating impact on your credit and they are a hassle. As for the tax implications, a law is about to be signed eliminating the taxes on the forgiven debt. I believe it will be signed very soon. Check with your attorney or accountant or both. I will also follow the advise of Keith and Pam regarding your relocation company and also talk to your lender regarding re-structuring your mortgage. If you have other assets, the bank might not accept your propossal. Good luck.
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Keith Sorem, Agent, Glendale, CA
Sun Nov 11, 2007
A couple of ideas:
1. Pam is right, talk with the relocation dept. and see what they can do. A good relo dept. understands that smoothing out the wrinkles in a move might involve more than it used to (meaning they may have more flexibility than they did in the past).
2. You might want to read my four-part blog on short sales and foreclosures. The bottom line in your case is that a lender would rather have you sell it for less (a short sale), than foreclose. However, if you have any other assets (401K, for example), the lender is going to want YOU to participate in the loss.
3. You might want to consult a CPA regarding the impact of renting the home if you cannot sell it. My wife and I became accidental investors way back when and it turned out to be a real blessing.

Speaking of credit scores:
Worst - BK or foreclosure - cannot buy a home for probably 5 -7 years
Next worse - short sale - tax implications (10-99 for the amount forgiven) and a "ding" that, if you already have some problems, might make purchasing a new home a tough go.
Good case - You might be able to re-negotiate the loan terms. I encourage you to talk with your lender. Most lenders are becoming very concerned about the loans they have and will prefer to work with a willing owner than conduct a short sale.
Best case is to hang on and rent it out (if you can handle the negative cash flow....which is why you need to talk with a good CPA (I am NOT a CPA).

good luck!
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Pam Winterba…, Agent, Danville, VA
Sun Nov 11, 2007
Does the company you are being transferred with have any relocation benefits? If so this may be the way to go. Yes, a short sale will effect your credit and hamper you in the purchase of another home. Do you have additional to pay closing costs if it is short or are you considering lender forgivemess? Talk with you accountant as the forgiveness part will trigger a taxable amount.
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