Posted on: 28th Jun, 2009 06:49 pm
i would like to fully understand the repercussions of what i plan on doing. with the bubble bursting on the housing market, i am one of the unfortunate individuals that lives in one of the worst areas hit. i bought my home for 380,000 back in 2005 and put down 80,000 and also have a heloc for 40,000. as of this point i owe 297,000 on the house and still owe the 39,000 for the second. with the foreclosures and what not, my same style house in my block is now worth 190,000 (one foreclosed and was sold just recently).
i tried researching getting a home loan re-modification but was denied because i supposedly make too much money…lol….barely under 6 figures.
so……my idea is this: liquidate all my assets (stock, borrow against my 401k(what’s left of it) and use that money to jump houses and buy my same house in my area that was foreclosed upon for $190,000 while i still have excellent credit. then attempt to rent my original house out….but lets say worst case scenario i can’t and i have to let my original house go?? my first option would be to sell short on it or get a deed in lieu. what then happens to the second mortgage i had for the $39,000??? do i have to claim bankruptcy to clear out that debt???? can the bank owner for the heloc loan of the original house come after me for that????
what are the repercussions of doing the above??? i can't see myself staying in this house for the next 20 years just to break even. i feel if i can jump houses while my credit is excellent then let my credit go to crap once i dump the 'cancer' of my first home. at least i will be living in a home that i know will have positive equity but with worse credit than living in a house with excellent credit but so far underwater i can see that damn ocean floor!
would greatly appreciate any answers or clarification!!!
thanks,
-r
i tried researching getting a home loan re-modification but was denied because i supposedly make too much money…lol….barely under 6 figures.
so……my idea is this: liquidate all my assets (stock, borrow against my 401k(what’s left of it) and use that money to jump houses and buy my same house in my area that was foreclosed upon for $190,000 while i still have excellent credit. then attempt to rent my original house out….but lets say worst case scenario i can’t and i have to let my original house go?? my first option would be to sell short on it or get a deed in lieu. what then happens to the second mortgage i had for the $39,000??? do i have to claim bankruptcy to clear out that debt???? can the bank owner for the heloc loan of the original house come after me for that????
what are the repercussions of doing the above??? i can't see myself staying in this house for the next 20 years just to break even. i feel if i can jump houses while my credit is excellent then let my credit go to crap once i dump the 'cancer' of my first home. at least i will be living in a home that i know will have positive equity but with worse credit than living in a house with excellent credit but so far underwater i can see that damn ocean floor!
would greatly appreciate any answers or clarification!!!
thanks,
-r
Hi rusty_morton!
Welcome to forums!
If you short sale your property, you will still be liable for the second mortgage. The second mortgage lender has the right to collect the mortgage dues from you. You may negotiate with the second lender and check out if he can lower the amount so that you can pay it off.
If you can pay off the second mortgage debts, then you will not have to file bankruptcy. "Can the bank owner of the original house come after me for that????"I did not understand what you wanted to mean by this. Can you please explain?
Sussane
Welcome to forums!
If you short sale your property, you will still be liable for the second mortgage. The second mortgage lender has the right to collect the mortgage dues from you. You may negotiate with the second lender and check out if he can lower the amount so that you can pay it off.
If you can pay off the second mortgage debts, then you will not have to file bankruptcy. "Can the bank owner of the original house come after me for that????"I did not understand what you wanted to mean by this. Can you please explain?
Sussane
Hi Sussane thanks for your feedback!
I see....
So it is feasible to buy the second home as my primary residence and then do a short sale to negate my left over principle(debt) of my first loan on my original home. Then work with my lender of the HELOC loan on a plan to pay that off over an extended time. End result would be my family and I living in the same style home with half the principle balance to pay off but with a FICO score of -75 to 100 and having to pay off that left over HELOC from my first home.
Sounds like a much better place to be than where I am at now with a home so far underwater
Are there any other circumstances that could circumvent that outcome???
oh and my explanation for the quote:
"Can the bank owner of the original house come after me for that????"
I was trying to identify if the bank owner of the HELOC loan could somehow try to corrupt my mortgage for the new home i buy after I stop making payments of said HELOC(assuming i cant rent out the original home).
I see....
So it is feasible to buy the second home as my primary residence and then do a short sale to negate my left over principle(debt) of my first loan on my original home. Then work with my lender of the HELOC loan on a plan to pay that off over an extended time. End result would be my family and I living in the same style home with half the principle balance to pay off but with a FICO score of -75 to 100 and having to pay off that left over HELOC from my first home.
Sounds like a much better place to be than where I am at now with a home so far underwater
Are there any other circumstances that could circumvent that outcome???
oh and my explanation for the quote:
"Can the bank owner of the original house come after me for that????"
I was trying to identify if the bank owner of the HELOC loan could somehow try to corrupt my mortgage for the new home i buy after I stop making payments of said HELOC(assuming i cant rent out the original home).
rusty_morton
i will advice you to liquidate all the assets (you stated so many including stcck, 401k) and just pay off the second mortgage. HELOC.
Then apply for a new mortgage and purchase a new home.(make sure you keep some amount for down payment out of the liquidated assets) .
Move to the new house.Rent out the old house. Rent of the old house will take care of first mortgage on the old house and you will be happy with the new home where you are not underwater.
Over a period , real estate will go up and you can cash in the old house.
This is the simplest route without any credit score crunch.....
keep in touch..........
:arrow: :arrow: :arrow:
i will advice you to liquidate all the assets (you stated so many including stcck, 401k) and just pay off the second mortgage. HELOC.
Then apply for a new mortgage and purchase a new home.(make sure you keep some amount for down payment out of the liquidated assets) .
Move to the new house.Rent out the old house. Rent of the old house will take care of first mortgage on the old house and you will be happy with the new home where you are not underwater.
Over a period , real estate will go up and you can cash in the old house.
This is the simplest route without any credit score crunch.....
keep in touch..........
:arrow: :arrow: :arrow:
Thanks manoj...
Agreed - that is definitely my ideal outcome!
If I could afford to pay off the $39,000 HELOC loan and still be able to have 20%(around 40,000) available on my second home I would be very happy....but unfortunately that is a pipe dream. And I believe the likely hood of being able to rent out my old house on a consistent basis in this economy with a neighborhood of foreclosed homes is highly unlikely, hence my concern with identifying the worst case scenario and trying to prepare for it.
Agreed - that is definitely my ideal outcome!
If I could afford to pay off the $39,000 HELOC loan and still be able to have 20%(around 40,000) available on my second home I would be very happy....but unfortunately that is a pipe dream. And I believe the likely hood of being able to rent out my old house on a consistent basis in this economy with a neighborhood of foreclosed homes is highly unlikely, hence my concern with identifying the worst case scenario and trying to prepare for it.
Hi rusty_morton,
If you do not pay off the second loan, the second lender can charge off your account to a collection agency or can even garnish your property. In my opinion, there are chances that he may place a lien on your new property.
Thanks
If you do not pay off the second loan, the second lender can charge off your account to a collection agency or can even garnish your property. In my opinion, there are chances that he may place a lien on your new property.
Thanks