Should I let my house go into foreclosure?
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I am often asked for advice about foreclosure vs. short sales. Short sales are very complicated and there MUST be extenuating circumstances for this to be approved by the lender, or in your case, lenders (i.e. lost job, reduced income, etc.) Being upside down, or not wanting to pay high payments anymore is not going to be an approved reason for a short sale.
Short sales only benefit the bank. If the bank agrees to take less money, it is a far easier hit for them than to take the property back. It may benefit Realtors to also agree to assist you in a short sale, however many don't realize that until the very last day, the commission may not be approved by the bank, in which case, the Realtors don't get paid or get paid less than whatever the agreed-upon amount was to be.
There are also tax ramifications to the seller from a short sale. If your property was sold $50,000 short, you will be taxed on $50,000 income (as if you actually GOT it!) And if the paperwork is not done exactly right, you may receive a $50,000 bill from the bank. Talk to a lender.you will also find out that short sales affect your credit and ability to buy again every bit as negatively as a foreclosure.
In foreclosure, there are no deficiency judgements unless it is a judicial foreclosure (most are not). Check the laws in your state. You also don't have the bank into all your personal affairs. It's a clean and much simpler process even though it hurts like heck to go this way. It always "feels better" to try to do a short sale because it is the more "responsible" thing to do.
I cannot advise you but I gave you enough information to make an intelligent decision.
If you are going to buy again, do not make ONE late payment and you will be buying again in two years or less..foreclosure OR short sale.
Never let it go into foreclosure. I would try making the house a little bit bigger or adding a bathroom so the value goes up. Also add porch, closed fence area and make it look good and sell it.
you can make money to pay your bills at myprivatedorm.com
If you owe more on your property than market value - you could still list with a Realtor that specialises in short sales. Basically they list the home and speak to the bank about accepting an offer lower than the amount owed (and based on current home values) the bank will usually give you a 1099 at the end of the year for the difference and you then have to report that as income. Speak to your lender and CPA first. they also will negotiate the fee with the Realtor(s) for you and pay them less to save you $. In my opinion a foreclosure would be worse for your credit.
I would sell it at a loss, reason behind that is when you let something go back to the bank, you may as well kiss your credit goodbye and you will end up paying that in intrest alone, forclosure will also affect getting any kind of loan again for 10 years (then you will have intrest if ya do)
Is there a 4 year college/university in your community? If so, you might want to consider posting it for rent in the college newspapers. Dig deep for good prospects and go for all male or all female.
Indicate that you are open to sub-leasing , but that one renter has to actually sign as the responsible leasor.
Thereby if you have 3 bedrooms you can rent to three people, which easily covers your note with a little cushion thrown in.
You will have to take deposits from all renters. If you are successful with the rental aspect make arrangements to accelerate principal payments on either or both of the mortgages.
They'll try to tell you "no" here because drawing/paying down principal also the double whammy effect of accelerating interests payoff and thusly results in a shorter payout. So you must persist and insist.
I'll add a resource to this post in a few minutes that might be able to help you accomplish the early pay off part.
Maybe sell it on a land contract to some one or rent with option to buy. That way you make your house payment every month. What state are you from??
What you should do first of all is try to keep up with the payments until you have closed on the new house. The mortgage company that you are getting the new loan from will not want to see at the last minute that you've started missing payments on the old house, and could turn down the loan at the last second.
But after that, you should probably try to avoid foreclosure for as long as possible by selling the property or finding a renter who can make the higher payment. Selling at a loss is better than being in foreclosure, in which you might sell at a loss anyway and damage your credit rating.
In terms of paying the difference, you can save up cash, or ask the lender for a short sale. That would let you sell the property for less that what you owe on it, although you probably wouldn't get any cash back at the sale. Since you have two mortgages, it may be easier to negotiate a short sale with the second mortgage company, since they usually receive very little, if anything, from a sheriff sale.
The foreclosure process is determined by state law, though, so check on your state's specific foreclosure laws to find out what the actual procedures will be.
Good luck.
ForeclosureFish
http://www.foreclosurefish.com/...
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