"I need to short sale my home so I can buy that house" is what I'm hearing all too often from homeowners who are ready to dump what they have and move on to something else...not so fast.
Strict lending laws makes this mission impossible. Short sale seems to be common practice these days to help homeowners get out of their current mortgage situation, however a successful short sale is no green light to shop for another home.
A homeowner put a contract on a million dollar custom built home that is ready for delivery in February 2011. However, as millions of other homeowners across the country they have negative equity in their current home, therefore cannot sell at the price needed to satisfy their mortgage, and do not qualify for both mortgages. This is a touch situation because they have already invested $100,000 in non-refundable deposits building the new home. A lender will not approve a new mortgage immediately after a homeowner has a short sale or foreclosure on their record.
I respectfully declined the listing and advised them selling their current property is not a resolution. This is a situation that could very well lead this family to homelessness, should they be able to successfully short sale their home and then get declined for the new mortgage due to the short sale. They are currently in negotiations with their current lender while the builder in now on the back burner. Unless the builder is willing to refund the $100,000, they may loose those funds and remaining in their current home until the market improves. The good news, they will not be homeless.
Homeowners who have to short sale their home will not be able to purchase for at least two years from the time of the short sale is the general consensus. This also depends on the terms of the short sale, and the lending laws in your area. Check with your local REALTOR to discuss your options PRIOR to making any decisions on selling and purchasing a property.
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