Short Sale or Foreclosure?


Posted by Miserable About Michigan on June 25, 2008 at 18:07:10:

I bought my first home in Michigan at 23 -- Boy did I think I was hot stuff!! I recently moved to Georgia for a job that almost doubled my salary.

Unfortunately, my home has been on the market for almost a year = $12k in mortgage payments. The real estate broker wants me to reduce the price of the home to $90k (I owe $97k) -- this would mean bringing at least $13k-$15 to the table (ONCE I get an offer). To further the dilemma, my new realtor has concerns about the structure of the basement, as there are cracks along the 3 of the 4 basement walls. To clarify: before I purchased the home, I hired a structural engineer to tell me it was OK, so the PERCEPTION of a problem with the foundation is stalling any offers. I've already invested a good deal of money into the home and I certainly can't afford to invest more money in an empty house 750 miles away.

I do not own a home in Georgia (I rent) but have a great deal of credit card debt ($25k) but nothing is late or in default. In fact, my credit rating is 731. I have a Discover card, so it seems though this card's APR would increase -- any way to know FOR SURE whether your credit card company has a Universal Default policy? (Will they tell you if one calls and asks!??!)

I have heard of short sales and called my lender (WaMu). When I spoke with them, they were very vague about how to qualify, what "financial hardship" means, etc. They said that there would be tax implications (although you mention that there are not). The thing that I am worried about is: What does financial hardship necessarily entail? It's certainly hard for me to keep paying money on a vacant home but they may think that because I earn close to $90k/year that I can 'afford' to pay. What should I do? Try the short sale or go for a foreclosure? I've worked hard to get where I am but an extra $1200 a month in my pocket would be great!!

If the credit risk (short sale/foreclosure) is similar, what are the benefits to one over the other? Any help is appreciated!!!


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