Foreclosure - Options?

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Icon Mini Profile sjo426

Joined: 17 Oct 2011

Posts: 1

1.56 Dollars($)
Post Posted: Mon Oct 17, 2011 12:51 pm    Post subject: Foreclosure - Options?

My girlfriend and I have been together for 6 years and about 4 years ago we purchased a house together in IL.......both of our names are on the mortgage. Well, long story short we are separating and I am moving back to Dallas. The house has been on the market for about 4 months now but we've only had 2 showings. We owe $230k, are asking $215k, but it is only worth about $190k. Neither of us can afford the house on are own so I was kind of curious about my options. If we let it go into foreclosure can I buy another house right away if I take out a loan from my 401k for the down payment (talking about putting half down). Or what if we let it go to foreclosure, take out $50k from my 401k, borrow another $50k from friend/relative and outright purchase another home.....can the old lender come at me for anything?

I know I will get a lot of feedback about how I signed a contract and was ok with everything at the time. Or how my girlfriend and I shouldn't have made such a committment. I understand all of that and am just trying to make the best decision I can with my life.

Icon Mini Profile smithsussane

Joined: 18 Sep 2008

Posts: 12591
Location: Alaska
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Post Posted: Mon Oct 17, 2011 8:50 pm    Post subject:

Hi sjo!

Welcome to forums!

If you let your property go into foreclosure, you won't be able to get a mortgage to buy a property immediately. You will have to wait for 3-4 years in order to qualify for a mortgage after foreclosure. However, if you wish, you can purchase a home outright using cash.

Feel free to ask if you've further queries.

Icon Mini Profile sabrinatoss
Community Expert
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Joined: 16 Jan 2011

Posts: 669
Location: Australia
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Post Posted: Mon Oct 17, 2011 9:38 pm    Post subject:

Hello sjo,

*Save up money to get current.
*Establish a repayment plan or forbearance agreement with the current mortgage company.
*Modify the terms of the existing loan through a mortgage modification, agreed upon between homeowners and lender.
*Refinance through a traditional or hard money lender and obtain a foreclosure bailout loan, if there is enough equity to qualify.
*For FHA loans, obtain a partial claim to get current. This will result in a lien being placed on the property for the amount of arrears, but reinstates the mortgage.
*Sell to a private investor or friend/family member who will allow the homeowners to continue living in the property.
*File bankruptcy and include the house (Chapter 13), and keep up with the court-ordered repayment plan.
*Sell the property for less than what is owed through a short sale. Tax liabilities may be a result of this option.
*Sell the property outright for as much as possible, paying off the loan in full.
*Offer the bank the deed to the house to avoid going through with the entire process with a deed in lieu of foreclosure.
*Just move out, abandon the house, and begin the process of becoming financially stable after foreclosure.


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