Profile picture for ArnzDC

5/1 ARM

   My loan will reset in the middle of this year.  I don't think I can afford higher mortgage if I refinance so, I'm looking to sell.  Compared to some COMPS, my home will be less than what I bought it for.  How do I obtain "mortgage forgiveness" for the difference?   I bought it for $147K and probably worth $99K-$110K.  Will I have to pay the difference?
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January 19 2010 - Nampa
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Profile picture for wetdawgs
You may have to consider a short sale.  Find an agent with extensive experience in short sales.

Whether or not the difference will be forgiven depends on your financial conditions.   For example, if you can demonstrate hardship it is possible that you will not be responsible for the difference.

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January 20 2010
Before you decide to sell, you need to consider your options!

First of all, if you sold, where would you go and what would the replacement costs be for the next home?  If you rent, you loose the tax benefits of the home, so don't just go by the monthly payment, check with your CPA on the true net costs.

Secondly, check with Neighborhood Housing Services to see if they can help you settle up with your mortgage company.  They don't charge you a dime and they get paid if they succeed via the government since it will help stabilize the economy.

The process you are describing is called a loan modification.  Some lenders are better than others about doing these.

A short sale is an option, but I would try the loan modification route first and save yourself a move if possible.
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January 20 2010
Loan modifications should be a last resort, but in some cases are the best option. 

There could be other options depending on what type of loan you have now; FHA, VA, Conforming? Who is the current servicer?

Let me know the answers to the above questions, and I can answer more accurately.

Charles



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February 19 2010
 
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