Profile picture for JJesenovec

Short Sale to upgrade

We bought our home in 2001 for $155,000.
It is now worth maybe $110,000 to $118,000 due to the bubble burst 
We have a 2nd mortgage for $40,000 that went into upgrades
All total, we still owe about $163,000.
Before property taxes and insurance, we pay about $1328 per month.

With the lowering of home prices and interest rates, I can pay the about same per month and get almost a $300,000 home.
I don't want to necessarily get a $300,000 home but I do want to upgrade.
I have perfect credit and have never been late on any type of credit payment.
If I sell my current home for $110k-$118k I will still owe $45k-53k on it.
What are my options? I believe ultimately it would be worth the loss of $45k-53k in order to upgrade.  The question is, can I get a loan or is their some other option to cover the cost of the short sale loss.
  • June 05 2012 - US
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Answers (3)

Profile picture for wetdawgs
What Cesar is proposing is called "buy and bail", something that lenders strongly work to avoid.   If you are proposing to follow the proposed pathway, make sure you have approval from the lender before moving forward, otherwise, you may discover you are not qualified for the short sale and must bring cash to closing.



  • June 06 2012
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This is what you can do: If you can qualify (for a loan) for a new home using both the new home and your existing home's mortgage payments, you can buy the new home now and then after you close on the new home,  you the complete the short sale of your old home.  Of course the lender will have to APPROVE the short sale but this is a way to get your upgrade and your short sale both.  

But remember lenders usually don't approve short sales unless they are behind on payments but it is possible...

I did this exact same thing with my client who upgraded first then completed a short sale afterwards just 2 months ago.  GOOD LUCK!
  • June 06 2012
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  • June 06 2012
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