Posted on: 20th Feb, 2009 06:47 am
My husband and I are nearly upside down on our motgage. Foreclosures in the surrounding area have significantly reduced our home's value and we have a 70K HELOC in place. We want to use the HELOC funds as a downpayment to move to a better area (new construction), and would sell our current house for what we owe, gaining no profit. Once we moved out, we would repay the the 70K balance of the HELOC over a 10-18 month period before taking posession of our new home.
Is there any circumstance under which this plan would work? Is is possible that our HELOC lender would agree to allow us to pay back the 70K (although we no longer own the house) over a 10 -18 month period?
And, finally, would this have any effect on our credit if we never missed a payment and intend to keep paying, just not living in the house anymore?
Sorry for the multipart question, but we REALLY APPRECIATE any advice on how we could make this work or if it's impossible.
THANK YOU!
Desperate in Maryland
Is there any circumstance under which this plan would work? Is is possible that our HELOC lender would agree to allow us to pay back the 70K (although we no longer own the house) over a 10 -18 month period?
And, finally, would this have any effect on our credit if we never missed a payment and intend to keep paying, just not living in the house anymore?
Sorry for the multipart question, but we REALLY APPRECIATE any advice on how we could make this work or if it's impossible.
THANK YOU!
Desperate in Maryland
Hi kayerswarren,
Once you sell off the property, both the lenders will demand the dues from you immediately. You will have to negotiate with the lender regarding the HELOC payments. But chances are that he will not agree to let you pay the dues over the next 10-18 months. Rather, the lender may charge off the loan to a collection agency.
A charge off will definitely affect your credit and reduce your credit score. And if you sell your property through a deed in lieu, it will lower your credit score by 250 points. However, if you sell off the property through a short sale and pay the deficient amount to the lender, your credit score will be lowered by 75-100 points.
Take care
Once you sell off the property, both the lenders will demand the dues from you immediately. You will have to negotiate with the lender regarding the HELOC payments. But chances are that he will not agree to let you pay the dues over the next 10-18 months. Rather, the lender may charge off the loan to a collection agency.
A charge off will definitely affect your credit and reduce your credit score. And if you sell your property through a deed in lieu, it will lower your credit score by 250 points. However, if you sell off the property through a short sale and pay the deficient amount to the lender, your credit score will be lowered by 75-100 points.
Take care