Upside down on mortgage and need to move... (short sale, foreclosure)

[Hunnybe15]

I bought my house for almost 240,000 and its currently worth only 175,000. Any suggestions? Can I sell for less and transfer the balance owed to a new loan? Thanks

[jcoltrane]

NO! A mortgage is not a checking account.

The "balance owed" will be due at closing; unless you arrange with your mortgagor for a 'short sale', which means the mortgage holder will 'forgive' the balance.

I suggest you locate a good attorney, and have him/her outline your options.

[lavender]

The balance wont necessarily be due at closing. If you short sale, unless you are a really unlikely to ever be able to pay the bank (ie dying, very very old, unemployed with no hope of work - other/etc) they will want you to sign a note for the balance agreed to be due. Then you have to pay them somehow and this should be set up before closing with lender.
This is going to kill you credit wise for another loan, but you don't have much choice. Short Sale or foreclosure will hit your credit hard. You may not get another loan. Have you talked to the lender yet? I am sorry you have this situation, you are clearly not alone, and banks are beginning to realize they have to try and work with owners in this predicament. Your lender should be the first visit, before the attorney. I am not sure why you would need an attorney, they are only going to cost you even more money that you probably dont have already. Look at some of the online money advice sites, I think CNN has a good one, you just have to search it out.

[SierraDog]

I disagree Lavender - the homeowner should have an attorney negotiate the SS with the lender, there are many issues which are problematic and could benefit from an attorney's involvement.