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We bought our house in Hopatcong 5 years ago with the hopes that we would be in it for a couple years, sell, and move closer to our family & jobs. As with everyone else, our value has gone down and now we're stuck. We have considered a short sale but are afraid of how it will affect our ability to purchase another home. Our other alternative is to rent the house out, but will that also hamper our ability to purchase another home?
Help! Anybody!
Not to advise you what you should or should not do, you should talk to a knowledgeable realtor, and perhaps even your lender(s) and see what can be negotiated to avoid a short sale or in the case of a short sale.
More importantly, contrary to what another poster said about being liable for the amount between your purchase price and the price in a short sale, this law was amended by the IRS in 2007 (i think) and was extended through 2012. So, in the event you do proceed with a short sale, your tax liabilities will not be affected.
Short sales these days are very much negotiations between borrowers and the lenders. You may be able to arrange a transaction whereby your lender(s) do not report negative information on your credit history. Then again, they may not. This is something that varies from short sale to short sale from lender to lender.
Whatever decision you make, it should be in the interest of your family's well being first. If after you weigh all the factors, a short sale makes sense, you should move ahead and move ahead quickly.
My own anecdotal comment...quite a few of my affluent friends who have expensive homes in gated/private communities in the northeast are prepared to (on advise from their financial planners) walk away from their homes if either property values fall below a certain threshold or if the safety/security of their families becomes jeopardized if the economy continues to deteriorate and the wealthy become targets.
Some of these acquaintances are the same people who made their fortunes during the excesses of the last 10 years and while they are my friends I find their actions and career decisions morally reprehensible.
Nonetheless, obviously one can't make generalizations based on my own anecdotal observations, but IMO, if the well to do are prepared to walk from homes they can easily afford, you should be able to look above the moral hazard of a short sale.
How can you be friends with people you find "morally reprehensible"?
People walking away from homes they can afford because they may lose some of their investment is terrible. Does anyone have any sense of right and wrong any more?
That anecdote doesn't add up. I also know high income earners and not one of them has even hinted at walking away from their property. Maybe because they view it as a home first and foremost? Maybe they are simply a better class of people?
How can you be friends with people you find "morally reprehensible"?
People walking away from homes they can afford because they may lose some of their investment is terrible. Does anyone have any sense of right and wrong any more?
That anecdote doesn't add up. I also know high income earners and not one of them has even hinted at walking away from their property. Maybe because they view it as a home first and foremost? Maybe they are simply a better class of people?
I am not wealthy, so I can't speak to how they could be comfortable just abandoning their homes, but their story goes like this...
They primarily live in gated/private communities with other wealthy/high net worth households. Their communities and/or peers are already planning how to keep safe/keep from being targets b/c of their wealth, which they feel will become a target for crime should the economy continue to contract.
Additionally, they have reasonable concerns state and local government, facing severe budget problems, won't be able to protect the wealthy as they'll be forced to cut back on public safety services (fire, police, rescue, etc) over the next few years.
If the above comes to pass, they'll also likely be deeply underwater on their residences.
Therefore, they're ready to mail the keys back and move into another residence they own, domestically or abroad.
Who knows if that is too doom and gloom, but the interesting thing is at least a handful of the well to do have no moral issues with bailing on their homes. And neither should the OP.
I though short sales were also for those families in trouble of foreclosure, but I'm just going on the suggestions given to me by my realtor. However, her suggestions just seemed too easy and I knew there would be repercussions which is why I brought my question to this forum. We've worked hard on the house and our credit to just throw it away.
You are all correct that we should have rented first to get a feel for the community and the commute, but my husband completely refused to go back into another apartment. Big mistake on my part, I really should have insisted and I hate to admit that I'm still angry at him. Well, hindsight is 20/20 and if I look at it in a positive way, it really taught us a major lesson and I will chalk it up to experience.
Not to advise you what you should or should not do, you should talk to a knowledgeable realtor, and perhaps even your lender(s) and see what can be negotiated to avoid a short sale or in the case of a short sale.
More importantly, contrary to what another poster said about being liable for the amount between your purchase price and the price in a short sale, this law was amended by the IRS in 2007 (i think) and was extended through 2012. So, in the event you do proceed with a short sale, your tax liabilities will not be affected.
Short sales these days are very much negotiations between borrowers and the lenders. You may be able to arrange a transaction whereby your lender(s) do not report negative information on your credit history. Then again, they may not. This is something that varies from short sale to short sale from lender to lender.
Whatever decision you make, it should be in the interest of your family's well being first. If after you weigh all the factors, a short sale makes sense, you should move ahead and move ahead quickly.
My own anecdotal comment...quite a few of my affluent friends who have expensive homes in gated/private communities in the northeast are prepared to (on advise from their financial planners) walk away from their homes if either property values fall below a certain threshold or if the safety/security of their families becomes jeopardized if the economy continues to deteriorate and the wealthy become targets.
Some of these acquaintances are the same people who made their fortunes during the excesses of the last 10 years and while they are my friends I find their actions and career decisions morally reprehensible.
Nonetheless, obviously one can't make generalizations based on my own anecdotal observations, but IMO, if the well to do are prepared to walk from homes they can easily afford, you should be able to look above the moral hazard of a short sale.
GLTY.
Thanks so much for the advice.
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