My husband and I thinking that we will need to short sale our house. My husband lost his job but found another one and it is only paying half of what he was making. We were turned down for a loan modification. We have a first and second mortgage on the house and we cannot afford to make the payments anymore. We are already behind two months. I am afraid that if we short sell we will not find a decent place to live. I have enough money in my 401K plan to make a downpayment on a new home. Should we buy a new house before we do a short sale or will that hurt us? We do not have an agent yet to ask that question.
Linda Bren
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Hi Linda. Doing the short sale first will affect your ability to buy. Buying a new home before doing a short sale may cause the short sale to be denied.
You should talk to a mortgage broker first to see if you qualify to buy a home right now. If you have missed mtg payments your credit scoring may already be affected. Lenders will be hesitant to lend you money knowing you are not paying the mortgages you already have.
Buying right now may not be an option for you. That will make the decision easy.
I hope this helps.
Thank you Wendy and Bryant for your advice. This sounds like a mess. Looks like we should not buy first. I really did not think about the fact that we may not be able to even get a loan before we really wreck our credit, but I guess since we are behind it is already wrecked. Sadly, we may have to just take our lumps and hope for the best.
You may be obligated to pay two mortgages then. There is no promise that the Short Sale will be successful.
Linda, if you are two months behind you need to call a realtor immediately and start your short sale process. The sooner you get it over with, the sooner you will be on the path to credit recovery. You will probably have to rent for 3 years before you can purchase another home. Also, depending on the monthly amount, you may want to pay the second trust before it gets 90-120 days late. Second trust lenders are usually easier to deal with vs. a collection agency when negotiating the short sale resolution. Just a suggestion. Good luck,
Diane
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