Short Sale vs. Foreclosure vs. Staying Put

iVillage Member
Registered: 07-11-2009
Short Sale vs. Foreclosure vs. Staying Put
4
Mon, 01-23-2012 - 11:21am

We bought our house 11 years ago and refinanced it 3 times; once because of debt, once to grab a lower rate (DH was deployed)

Lilypie First Birthday tickers
Community Leader
Registered: 07-26-1999
Mon, 01-23-2012 - 3:42pm

Jenn,

Sorry to hear that you are in this situation, not an easy one, and definitely stressful.

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iVillage Member
Registered: 07-11-2009
Wed, 01-25-2012 - 8:16pm
Tracy!

We really don't care for the area we are living in (not even going to begin to explain), so we would love to just move on. There are some major fixes we would have to do to rent it out. I like the sound of that, but we need a new fridge, new cupboards and a new shower in the basement (DH ripped a hole in the piping). So we are looking at $5,000 there. Plus we also have this eyesore of a garage that needs demolishing/major overhaul, siding that needs replacing...so another 10,000+! It's quite sad. Would we lose "homestead" on it if we rented? I thought that is a drawback to renting out.

I'm worried to talk to the bank. Our rating isn't bad, but it could be better. So I'm not certain what we would qualify for, if anything.

I have also been reading that, short sale wise, the mortgage company could claim the loss as income and that would hit us hard if it is the case!

We are just so lost on what is right to do?
Lilypie First Birthday tickers
Community Leader
Registered: 07-26-1999
Wed, 01-25-2012 - 9:26pm
You would have to check the laws in your district on the homestead exemption as laws are different in different areas. My understanding is that it has to be your main residence for a certain portion of the year, but again, it may be different where you are. Astor the short sale income, again, it will depend, there have been many hard hit areas that laws have been passed, and it may be an IRS thing I will have to go back and do the research, I know it was in another thread, that they will waive any short sale overage as income be ause of how many peop,e would be affected by it. When Carolyn, the CL stops in, she may have more information on that. My only content is that since the bank has to approve a short sale, and some of them are real sticklers right now, it may end up in foreclosure anyways which ends up with you losing control over the situation, and I'd hate for that to push you into a bankruptcy situation you may not otherwise be in. I would look around, find a real estate agent who is well versed in the short sale real estate market and get an honest opinion, and possibly a financial advisor who may be able to give you some other options you may not have thought of.
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Community Leader
Registered: 07-26-1999
Mon, 01-30-2012 - 12:13pm
Jenn, here is an article that I came across today that might also give you some other things to think about in this situation:

http://finance.yahoo.com/news/what-happens-when-you-walk-away-from-your-home-.html
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