Question by walkinglynn: Would money in our savings account hurt our chances of the bank agreeing to a short sale?
We relocated from Virginia to another state for my husband’s job. After a year on the market, we realize our VA home is under water and we want to discuss a short sale with the lender before we go into debt paying for two residences every month. My question is this: Will having money in our savings account hurt our chances at a short sale? Should we pay off our student loans and a car loan to lower our savings account BEFORE talking to the lender about a short sale? I’ve talked to HUD housing counselors and they were not helpful. At all.
Answer by Steve D
Having the money ion the bank will hurt (you have resources you can use to continue paying) and also paying off or down the loans will hurt, since it will lower your debt-to-income ratio, meaning you have more money to put towards your mortgage payments. The problem is going to be that as long as you have enough money or income as measured by assets or debt-to-income to pay your mortgages,. the bank is not going to let you walk away from your obligations.
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