Tuesday, August 3, 2010
Short Sell or Foreclosure?
Many of my friends and family know the situation we are in with our condo. If you do not know, I will give you a little rundown of the situation.
Our condo is an balloon interest only 80/20 mortgage. It will balloon in about 10 months to double our mortgage payment (around $3000.) We are not eligible to refinance so our only option is to sell. Like all homes, our condo has lost value and is worth $65,000 less then when Doug purchased it four years ago. Because our condo is interest only we have no equity in our home. Therefore, short sell is our only option. If you do not know, a short sell is selling your property for what it is worth market value right now and the bank agrees to the sell. This is different from a foreclosure but effects your credit about the same. The benefit of doing a short sell is you can make a deal with the bank to not come after you for the difference. Yes, we could possibly get a big fat bill from the bank for the difference. This is the same if we foreclose also.
It cost the bank about $50,000 to $75,000 to foreclose a home so we figure if the difference of our condo is about $65,000 then we have a good shot of the bank accepting a short sell. The bank also gets more with a short sell then if we foreclose and the bank sells it on it's own.
A good friend of ours did a short sell on his condo in Arizona. In the paperwork, the bank put that he is free from any recourse. This will effect his credit, but who cares because he is protected from recourse. This is what we are desperately praying for.
Sadly, many families are in this situation. We have a Dave Ramsey certified realtor and he is going to put our condo on the market in the next 30 days. We knew since we first got married that this was going to happen and I am happy the process has finally started. It's definitely in God's hands and if we do end up foreclosing then so be it. I know God will take care of us and I'm excited to see where God will put us once we move out. I'm trying to learn to be content in all situations and trust in God. It's super hard!
Some articles I found regarding this to topic:
Do Homeowners Still Owe Money After a Foreclosure?
Do I Owe Money After I Have Been Foreclosed On?
Short sale is no salvation
Homeowner frustrations mount as foreclosure proceedings double in Snohomish County
Homeowners at a loss
Second mortgage can limit options
Fannie Mae fights strategic defaults
Many bail on mortgage bailouts
Snohomish County foreclosures mount
Posted by Jessica Benson at 2:20 PM