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john91c · Joined: 01 May 2009 Posts: 2 2.77 Dollars($)

So we are moving to another state and currently live in Colorado. We bought out place 3 1/2 years ago with an 80/20. Of course we are now under and may have to do a short sale.

My questions are:
1) If we can still make the mortgage payments but we are moving to another state can this qualify for a short sale, the move to another state is a relocation and will cause a financial hardship, renting a home in new state + current 2 mortgages?

2) IF we short sale then it will be approx. $45-50,000. Is it better to use our 401K to pay the 2nd off and avoid a short sale? We have about 100K in our 401K.

3) How negatively will a short sale (pending approval) have on our credit if we do not miss any payments?

4) How long after a short sale can you start applying for a loan?

5) In colorado can the lenders come after you for the deficiency?

Thanks for everyone's help!

jenkin7 · Posted: Sun May 03, 2009 10:39 pm Post subject:

Hi john,

If you are current on your loan, the lender might not want to do short sale. You need to write them a hardship letter stating them the financial difficulty you are going to face due to the relocation. This can help you get the short sale approved by your lender. Using the 401k to pay the second mortgage is not a very good idea. But if the situation needs it, you can go ahead with it. If you do not miss payments, the effect on your credit will be less damaging. But even then, a short sale is expected to drop your credit by almost 70-100 points. After a short sale, you should wait for at least 2 years to get loans at affordable rates and terms. As far as I know, deficiency judgments are allowed in Colorado. So, the lenders may come after you for the deficient amount.

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Short Sale question