Me and my husband just came to terms that we can no longer afford our house because of the ARM we signed

Asked by Veronica, Temecula, CA Fri May 23, 2008

into. Plus our house depreciated so much that we lost over 250K in value to it. Our question is, can we try to do a short sell and buy another house at the same time? - Veronica

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Jim Johnson, , 78233
Fri May 23, 2008
It's not likely that you will be able to buy after a short sale, but you should talk with a mortgage broker to get the definitive answer. first though, you should contact your current lender to see whether they can work something out that would allow you to keep your home.

If things turn to the point where you must give up your home, do not let a worst case answer affect your judgment. As undesirable as a short sale is, it is a far better alternative than letting it go to foreclosure. Part of the advantage of a short sale is that the debt is forgiven. Allowing it to go to foreclosure could result in a deficiency judgment that will haunt you for decades.
2 votes
Sue Macmillan, , Coral Springs, FL
Fri May 23, 2008
First, contact a reputable real estate attorney to get advice. Second, contact the lender and ask if they have a program to renegotiate the terms of your loan to make it more affordable for you and also to adjust the balance reflecting today's appraised value. Third, if they don't or won't, contact a reputable experienced Realtor who can get your home on the market quickly for a possible short sale. It's not likely you would be able to purchase another home again right away but your credit scores will be higher than they would if you had to go to forclosure. Good Luck!
0 votes
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Fri May 23, 2008

If you have the assets to buy another house, your current lender will not allow you to do a shortsale. In order to get short sale approval you need to show that no matter what you do, you cannot pay your current mortgage payment.

A better answer for you might be to do what we call a short re-finance. We are seeing some success in this area (although I do not do them myself, I can refer you to someone who has done a lot of them this year). What happens in this scenario is you show:
1. You would default on the loan the way it is currently structured,
2. You owe more than the property's current value,
3. If you only owed what your property was worth and could get a fixed rate mortgage you could stay in the house and make the payments.

If this is true, then this might be a better solution for you.

Contact me directly and I can help you work through your options. I specialize in helping people make the right decision when they appear to be a no win situation. I wish you the best of possibilities and look forward to speaking with you.
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