Short Sale or refinance?

[Radiance]

Long story some pointers:
I can not afford the house since I got separated in Octuber
I worked a 6 month plan of hardship with the bank where they lowered interest rate to 5.5, but they no longer want to do that.

I sent partial payment on July which didn't get applied to either principal or interests.

Today I talked to them and now THEY want me to do a short sale ASAP.
They also mentioned I could try to refinance. They would evaluate an offer either from a buyer or from a bank if I refinance.

They prefer I short sale though.

Do you think I could try to refinance, short sale to my current lender that way and thus keep the house?

or, I could just short sale as they recommend NOW and get out of the house.

What do you think?

[zetta]

Is the bank offering you a refinance deal, or just saying, "if you find someone else who is willing to loan on an underwater house, you can pay us off"? If the latter, are they looking for a full payoff of the loan, or are they willing to forgive part of it? How much?

It's worth a call to a mortgage broker to find out if it's even possible to refinance with terms that are workable for your budget.

It takes time to sell a house. You could go ahead and put it on the market, and also look into refiancing while you are waiting to find a buyer.

[disneysteve]

I sent partial payment on July which didn't get applied to either principal or interests.

If it didn't get applied to principal or interest, what did they do with it?

[Radiance]

With short sale or me finding another bank to give me a mortgage they SAY they are going to forgive any deficiency. Now, this is HSBC we are talking about and they are known to change their "policy" with the tides.

They say they prefer for me to come up with a buyer for a short sale, but they will do a short refinance if I get another bank to give me a mortgage for current market value. As soon as I come up with an offer they would send an appraiser to validate the market price.

It takes time to sell a house. You could go ahead and put it on the market, and also look into refiancing while you are waiting to find a buyer.

Excellent point!

Steve, they left my payment in limbo under an "unapplied funds" column on the statement...They claim they can not process partial payments, but insist I keep on making them. Absurd. I rather send them a payment only after I collect enough for a full payment.

From the solely financial perspective I guess my question really is, is it a good move to buy a house today? with a short refi I would be basically buying my own house again at today's value.

[zetta]

From the solely financial perspective I guess my question really is, is it a good move to buy a house today? with a short refi I would be basically buying my own house again at today's value.

That depends mostly on your personal situation, and a little bit on the local real estate market. If you were separated and living in an apartment, would you want to buy a house today? Would you want to buy THIS house? Can you get a loan that is affordable for you? Is it likely you would stay there for at leat 5 years? Does the local market show signs of bottoming out?

You also have to look at the tax and credit score consequences of a short sale vs a short-refinance.

[Radiance]

Zetta, I think you are really asking the right questions! And for that I thank you.

I feel that if i was already living in a comfortable apartment - all settled - I wouldn't be interested in buying a house. If I was I would indeed want THIS house. But if I was living comfortably on an apartment, I could make use of the moneys in better ways today than on a mortgage, savings, increased 401k, emergency funds, college funds for my son. Overall financial freedoms and less worries, including home repairs. I would even reduce my workweek to 32 hours and spend more time with my son!

Even if I bought today I don't think I would stay 5 years as I will probably move out of Florida...

I think leaving the house is just facing some broken dreams and the neighborhood is certainly a good one and there are no managed rental communities in this area, all residential.

The place I would be renting is further away from my son's preschool, but has excellent elementary schools. Getting used to other stores is just part of the deal. My house is located close to everything! The super wal-mart and super target, the regional park, the preschool.

I think that, while I can still explore short refi, I would not be buying if I was renting so, what is the point.

[Radiance]

Ok, florida real state market is expected to loose an additional 25% value in the next 3 years. So, short sale it is.