Expert: Dennis Herman - 7/7/2009

Question
My daughter has a home in FL that is worth far less now then when she purchased it several years ago.  For family reasons, she, her husband and children want to move closer to her family in Maryland.  Would it be better for her to sell the home on a short sale or to try to rent the property?  They put about$70,000 down on when they purchased the house and have been told that they would only be able to sell it for about $20,000 less than what they owe on their mortgage.  Would a short sale affect their credit rating?  The house is a modest three bedroom ranch in central Florida.

Answer
There are a number of things you need to do to collect the data to make a proper decision.

Call a good Real Estate Agent and have them give you information on your market.  This will include a market price.  In some parts of Wisconsin prices are on the way back up.  

Check with your lender to see if you qualify for a federal back refinance on the property.  This is only available for your primary residence.  

Check with the lender to see if they can give you a lower rate and don't be afraid of asking them to reduce the fees.  You should be able to refinance for about $800 to $1200 in closing costs.

Check with an attorney to find your best option before you decide to file anything.  In most cases an attorney can negotiate a new loan for you.   It is also best to have an attorney represent you if you are considering a short sale.

Lots of luck.  Hang in there we are all hoping the worst is behind us.