Posted by ToniK on 9/10/07 9:18am
Msg #210093

Question about mortgages

OK I was wondering if i get approved for a mortgage to buy another house since our home is on the market right now. That if we close on our new home I was thinking of letting our other home go into foreclosure or short sale it. I know letting your home go into foreclosure will negatively affect my credit score but once I upgrade to another home I wont need another home.

There is this home 5 bed and 2.5 bath home for $349K that has been sittin on the market for 9 months. It was originally priced $450K but there are 20 other homes in the neighborhood up for foreclosure ranged in prices $369K-600K. I was thinking of offering $320K for the home and get and extra $30K to pay off half of the equity we have in our current townhome.

Now how would this work and would this be a good idea? Our first mortgage is $266K and 2nd is $66K. We have it up for sale for $309K. But if it doesnt sale and I already will be closing on the other home I wold let my townhouse go into foreclosure.

Renting out the townhome has crossed our mind but it seems the rental market in our area is stagnant. A few homes are listed as sale/rent and some are listed as rent but majority of the homes not selling.

But I am looking to buy in March though. I think the home I want or at least the neighborhood I want to move in home prices will drop even more and these 5 bed 2.5 bath homes will be cheap as $300K. But Im hoping, just keeping my eye on the market and looking to upgrade to a home.

Reply by Les_CO on 9/10/07 9:47am
Msg #210094

If you let your present home go into foreclosure, please remember you are responsible for the amount owed on the loan, interest, penalties, and all costs. If the home doesn’t sell for the amount owed, plus. YOU are STILL responsible to pay that difference. The banks can and will come after you for that difference. Not only will you ruin your credit for years, you could also be paying judgments for years. A VERY BAD IDEA!

Reply by Eric2OO2 on 9/10/07 9:59am
Msg #210095

In this market, you will find it difficult to get a mortgage for a second home with your current home already on the market. Even people with A paper credit will have a difficult time obtaining a mortgage in your situation.

"letting the home go in foreclosure or short sale" is not as easy as it sounds. Sure, you may not need another home. But you will need to finance a car, medical procedure, your childs college tuition etc. These things are just a few examples that require good credit.

Banks are not required to and may not accept a short sale offer anyway.

Reply by BetsyMI on 9/10/07 10:14am
Msg #210097

Beware of the short sale. It's my understanding that if you owe $100,000 (for sake of illustration) and the bank buys it for $80,000, "forgiving" the other $20K, you will get a tax document in the mail (a 1099 tax form) that proclaims you got an extra $20,000 in income, on which you will have to pay taxes. Probably an extra $3000-5000. This was in my Sunday paper yesterday. I think you are asking for trouble.

Reply by Eric2OO2 on 9/10/07 10:35am
Msg #210102

You are correct about the 1099

Reply by MistarellaFL on 9/10/07 11:33am
Msg #210110

Plant a statue of St. Joseph in the yard of the one you want

to sell.

Reply by dickb/wi on 9/10/07 2:04pm
Msg #210163

up side down..facing the house................... n/m

Reply by MistarellaFL on 9/10/07 2:37pm
Msg #210174

Dick, Is that face up or down? n/m

Reply by PAW on 9/10/07 10:54am
Msg #210105

What you are doing is tantamount to mortgage fraud. There is no reason to wait for foreclosure. Talk with your bank or mortgage company about the situation. They will be more than happy to work with you to prevent you from foreclosure and prevent them from owning any more real estate.

(Lenders are more receptive to short sales and reduced payoffs than they have been in the past. Just don't expect miracles.)

As a side note, you may not be able to finance the "new" home at all until you have resolved your current liens on the current property. And a pending foreclosure can seriously damage your credit such that the new financing would be out of reach all together.

I echo the sentiments that this is just a bad idea.

Reply by wyse/va on 9/10/07 11:33am
Msg #210111

I have a friend who is doing the same thing to sell his house as short sale I thing that he doesn't know about the 1099 so I am going to call him and let him know that.

Reply by Todd/OH on 9/10/07 12:19pm
Msg #210125

You are a gluttin for financial nightmares?

You would certainly start one with this idea. This one will bite you in the a$$ and return to haunt you for years to come.

Reply by ToniK on 9/10/07 12:31pm
Msg #210131

Just so everyone is clear on this. I am in no way in any financial troubles with my current home. I dont need to move to another home I just want to based on the foreclosures and prices that I can get right now rather than if I had sold earlier this year. So this more of a want/greed rather than need/neccessity. But thanks for all the advice. Its good to get feedback.

Plus I was speaking to a friend of mine who mentioned they did something similar to this. They have two homes and a business. She couldnt afford to keep both homes as her 2nd home was being rented and the tenant stopped paying. So she filed bankruptcy and is letting the other home go into foreclosure. The home is in her name only but hse is married and she said that it wouldnt affect her husband score and that she rather have her score messed up and not both of theirs.

Reply by Les_CO on 9/10/07 1:32pm
Msg #210150

If you want to do this, get yourself a Realtor, and some decent legal advise. Put your home on the market, offer a contract on the one you want to buy subject to your home selling. That way you will not be at risk. Trying to 'pull a fast one' on the banks or mortgage companies just dosen't work. EVERYTHING is on their side, to say nothing of the decades of experience, and expensive legal councel they have. Your "friend" may have some sad tales to tell you next year.

Reply by Susan Fischer on 9/10/07 2:40pm
Msg #210177

"So this more of a want/greed rather than need/neccessity. "

I simply must respond, since you put it out to the public.

This is disgusting. You want a great big house, and in order to get it you are just fine with a foreclosure on a home you can afford? You want the bank to bear the expense of your greed?

We all pay for these forclosures, one way or another. We all suffer when neighborhoods collapse. You will contribute to the lowering of home values in your current neighborhood by allowing a forclosure, but since you got your five bedrooms, you're happy.

Toni, it is my hope you get everything you want, and pay every conceivable price in the process.

Reply by Nicolle on 9/10/07 2:51pm
Msg #210181

Re: "So this more of a want/greed rather than need/neccessity. "

Good for you, Susan.

I am shocked to see such a casual attitute toward letting your home be foreclosed.

Foreclosure should be a last resort, not because you want an upgrade...

jmho

Reply by Nicolle on 9/10/07 2:52pm
Msg #210184

Re: "So this more of a want/greed rather than need/neccessity. "

sorry, meant casual "attitude."