Need to relocate for work...

[frustratedinBW]

We are located in California and have a non-recourse loan with Wells Fargo. We have only 1 loan on our home since we put 20% down when we purchased.

Purchase $570K
Principal $432K
Value $250K

My husband is in the process of interviewing for a new job that would require us to relocate approximately 70 miles away. We are trying to figure out what is the best thing for us to do is. We do have the money for a 20% down payment on a new home, our credit scores are approx. 775 and we do hope to buy again in the future. The only credit we do use is our mortgage and 1 car payment. My questions are these:

1. Will relocation be reason enough for a short sale?
2. Because we have cash assets (approx 300K) will the bank be less likely to forgive the debt?
3. If we continue to make payments throughout the entire short sale process will our credit take less of a hit?
4. Do we have any chance at purchasing a home in the new area we need to move to or is our only option to rent for a few years?
5. Are we better off renting our current home at a $700/month loss or getting rid of it regardless of the hit our credit will take?

Thanks in advance for any help/insight that can be provided! We are trying to figure out the smartest way to get us out of this entire mess.

[Moe Bedard]

Hello and thanks for joining the community!

Let me see if I can help you here a bit.

1. Will relocation be reason enough for a short sale?

I have not seen a short sale go through without the homeowner being late or in default. Maybe some others on here have obtained one before they were late? But in over 2 years, I have not seen one.

2. Because we have cash assets (approx 300K) will the bank be less likely to forgive the debt?

Yes.

3. If we continue to make payments throughout the entire short sale process will our credit take less of a hit?

Yes, but you most likely will be throwing good money after bad money until you realize that protecting your credit score is exactly what they think you will do. This is like poker and the banks are not getting many hands going there way because not may homeowner are paying. You are, so they will bet you will keep paying until you realize that you're up the creek without a credit paddle.

I am sorry, I have to be a bit colorful after doing this for so long.

4. Do we have any chance at purchasing a home in the new area we need to move to or is our only option to rent for a few years?

It will be really hard because your debt to income ratios and many lenders are getting hip to this. Renting is the best thing to do right now. At least for 2-3 years. The market is going down and if you buy now, then it will be worth a lot less in 2 years and the first 10 years of any mortgage is primarily interest only. (that is just like renting)

5. Are we better off renting our current home at a $700/month loss or getting rid of it regardless of the hit our credit will take?

This is a personal preference and many people will have a different opinion. If it was me, I would walk and rent. Use that $700 for retirement or to enjoy life.

I hope that helps you a bit and please let us know if you have any other questions.

[frustratedinBW]

Thanks Moe! I am hoping that the banks willingness to work with people is changing. I did actually get WF to modify our loan in May. We assumed given our cash assets they wouldn't help us but they did. We were in a 7/1 ARM 5.25% that would reset in 3 years. They changed the terms to a 30 year fixed at 4.875% no fees. Stayed non-recourse...etc. While I did show through detailed expenses that we were barely staying postive with cash flow, our debt to income ratio was already below 30% pre-modification. I guess we will try to short sell once the job situation is finalized and if they aren't as willing to help this time we'll seriously cosider walking away.

[Eyebolt]

I'm trying this right now in Michigan. I lost my job on one side of the state back in December but quickly found another job...but on the other side of the state (140 miles away). In today's economy I didn't see it making sense to turn down a job, so I took it. We moved and have been renting since February and my house has been on the market since January. We were doing fine with both my wife and I working...but in June she started having complications with her pregnancy and was put on bedrest (at 4.5 months along) and now we're on one income trying to pay rent at our current place and still pay on our original house. I just submitted my short sale packet last week (including two different offers) to GMAC who services the 1st loan (Fannie Mae) and holds my HELOC (part my the 80/20 when I bought the house). Even though I'm still current on all loans, I'm hoping that the loss of the job and having to move for another one coupled with the decreased household income count as enough of a hardship.