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I need to move in January for Job relocation but still have a house to sell which is underwater?!?!

I will be moving from WI to Dallas, TX.  I have never missed a payment and have good credit.  My house has been on the market for a few months with no interest at all.  I need to move soon and seem to be out of options.  I don't even know if I would be able to rent a house if I just up and left.

Any help would be appreciated.
  • December 19 2013 - US
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Answers (2)

You have three options: 1. Bring money to Closing; 2. Rent it out or 3. Do a Short Sale. Ask your agent to go over how that works with you as it is rather an involved process. I do not recommend that you stop making your mortgage payments even if you move. 

If you are able to make up the difference between what your home sells for and what you owe, your credit can remain intact. A Short Sale will adversely affect your overall credit rating AND lenders generally want 2 years after a Short Sale to approve a mortgage to buy another home. 

If you do the Short Sale, be sure that your real estate agents gets the bank to put in writing that the amount received is accepted as payment in full and the debt you owe them is ZERO. Once your agent helps you negotiate the contract with the buyer, they then need to negotiate the contract with the bank. The bank needs to approve the sale and release the title so the property can be sold BUT they can do that without accepting the amount as payment in full from you. They can then come back on you at any time in the future and demand payment so it is imperative that your agent gets them to put that in writing. 

Some banks are trickier / sneakier than others so be careful. Make sure your agent, or their broker, is comfortable and proficient with doing Short Sales. 

Contrary to popular perception, one cannot just walk away from their home with no repercussions. You signed a legally binding contract with the lender agreeing to pay X amount every month for X number of years. That agreement stays in effect even if you leave the home. 

You are not the only person who has found themselves in this predicament and it's not enjoyable. If you can accept the financial loss, great! If you are unable to make up the difference, see if renting it out will get you enough to cover the mortgage - or close enough that you can manage for a few years. If neither of the above are possible, then ask your agent to start the Short Sale process. If your present agent doesn't want to, or is unable to, ask them to recommend a local agent who is fluent in Short Sales. Because you are moving for a job, you will qualify for a Short Sale. Most lenders/banks will abide by the rules and work with you and your agent to get it done; there are a few who are monsters to deal with. There are things your agent must do and things you must do; do everything they ask in a timely manner. There will be reams of paperwork. The people at the bank may not be pleasant (they don't have a pleasant job or working environment); don't let their attitude infect you. Maintain a positive attitude and a pleasant disposition throughout the process. 

Here's the average points deducted from a person's credit score:[ Keep in mind that this is average; the number can be higher or lower.]  According to Fair Isaac report: the Average points lost on a FICO score: 
30 days late = 40-110 points
90 days late = 70-135 points
Foreclosure, Short Sale, or Deed-In-Lieu = 85-160
Bankruptcy - 130-240

Good luck with whatever you decide to do! No matter what happens, keep your happy place. 
  • December 19 2013
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Perhaps you should look into renting out your WI home or doing a lease with the option to buy on it, loosening up your monthly overhead, allowing you some money to spend on a place to rent when you move to Dallas.

For our clients who couldn't sell, that is what they did - they call it being the reluctant landlord - not exactly what you wanted/planned to do, but basically your renter can help you make the mortgage payments (and hopefully cover them for you).

I recommend reaching out to an experienced property manager to help you rent your home - they will do a criminal screening and background/credit check on the possible tenants to make sure you get the right person - also they likely will get a person/family in there with a 1 year+ lease, so you don't have to worry about it for a while.

Good luck!  (It will work out.)
  • December 19 2013
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