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We are in a tough situation and any advice from experts would help greatly...
Purchased our house 2 years ago and now we must sell due to layoff and new job in a new city. Due to housing declines, we will sell our house for at least 5-10K less than what we owe. This means little to no downpayment for house in new city. Current mortgage was 100% financing, no problems, we can afford and have never missed a payment. However, my husband has a lingering collection that he though was cleared up and I have a lingering collection and 2 credit cards maxed so FICO scores are sort of low. My mid is 603 and husband's is 655. That will probably make it difficult for us to get another mortgage, especially with a small downpayment and very small reserves(5% is about all we can muster if we're lucky after cashing in 401Ks). Wondering should I take some of the $$ I was planning to use for downpayment and pay off credit cards to raise my score (hoping this would get me over that magic 620), but if I do that, we may not even be able to get to 5% down.
What would be the best plan of attack? Are we going to be stuck renting in our new city? I really love our house and wish we didn't have to move, but due to economy, new job is in a different city so we don't have a choice in order to avoid foreclosure and short sale which will really kill our credit
Thanks for any advice,
Sorry to hear about the tough position you are in.
If I were in your position I would probably suggest renting for the first year in your new city. This will give you time to pay off the credit card dept, build up a down payment, and maybe do something about your collections. I would not worry about a fast recovery in the housing market. Personally, I think that a turnaround is going to take 2-3 years.
Good luck and keep your head up
Short sell will be considered the same as foreclosure to lenders in the future.
Maybe renting for 3yrs will be a good idea anyway.
A new city? You really need to get to know the place anyway, before buying.
Hopefully you can find suitable housing that is below your budget.... and can save some money for when you can buy again.
Sorry to hear about your situation, it is common right now.