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Question
My wife and I are attempting to buy a home. We have the down payment and are approved for the loan. We had hoped to sell our current home after closing on the new one. But the old house has been needing floor (wooden) repairs and just found out yesterday it will cost thousands of dollars to repair it just to sell it.
The floor is deteriorated badly and could be fixed at great expense. Can we do a short sale? How does this affect our credit. Will the lender expect us to pay the negative equity?
We are in our early 60's and live in Oklahoma.
Thanks,
Marvin

Answer
Marvin,

I'm afraid I am not the bearer of good news. You could possibly do a short sale, but here is what you are up against:

1. Short sales are long in time; it takes months to get the lender to agree to it.

2. Unless you repair the floor before the sale, you are limiting yourself to buyers who are willing to take care of the repairs themselves (they can get an FHA 'fixing-up' loan. Such buyers are few and far between.

Short sales do affect your credit adversely. If your credit right now is very good (750+) you should still be able to get a new loan. Also, if you can arrange financially to close the new loan before the short sale, you'll circumvent any potential credit dings.

Best wishes,

Eric
About Real Estate Home Mortgages
This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here

Real Estate Home Mortgages

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Eric Forster

Expertise

Did your last mortgage broker or lender trick you into a messy situation which could cost you your home? I've been close to 30 years in the mortgage industry, and I've seen it all. Believe me, it is not pretty. As the owner of a mortgage company I am called frequently to testify as an expert witness in mortgage fraud cases and other cases where lenders did not fully disclose the terms of the loans they were offering to the borrowers. I have seen fraud being committed by borrowers - and by lenders. It's a tough world out there. And by the way - you are invited to visit my website, www.real-estate-expert-witness.net.

Experience

More than 25 years in loan production and underwriting in Southern California.

Organizations
Mortgage Bankers of America (Southern California Chapter)

Publications
Former columnist for AOL Financial Center and the author of a mortgage primer.

Education/Credentials
MBA (Finance)

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