All Forum Posts by: Danny Foshizzle

If you have equity in the place, just sell it. Pay off the bank what you owe them, pay all the costs associated with selling real estate, and pocket what's left. Its just that simple.

Lets say you have a house that's worth $100K, you own $75K, and you can no longer make the payments. It might seem like you have $25K in equity. You don't. It will cost you between $8K and $12K to sell the place. Lets call it $10K, which is the agent's commission, the costs (mostly title insurance, but also a ton of small fees), and seller concessions. You pay off the $75K loan, and pocket $15K. That's your true equity.

Now, if you are still making the payments (meaning you've not yet trashed your credit), and you go get a HELOC, you'd be doing good to get the same $15K. Now, you let both loans go into foreclosure. You can rest assured the lenders will come after you big time. By the time it gets to the sheriffs sale, it worth, at best, $100K. That's if you're still living there and taking care of it. At worst, you've left and its been trashed. In any case, it will sell for a discount, if it sells at all. The lenders have tacked on a bunch of fees, back payments, late charges, etc. So, instead of owing $90K, you owe $110K.

The lenders know you just took that $15K in cash. What I've seen lately is that the lender will bid only a fraction of what's owed at the auction. In your case, maybe only $40K. Then, they will file a deficiency judgment against you for the other $70K. Maybe it brings more at the auction, and the judgment is less. But it won't bring $110K and you won't be off the hook.

So, with this little scheme, you pocket $15K, trash your credit, have an outstanding judgment for $70K. If you have any credit card balances you better pay those off because the rates are going to 29%.

If you really have some equity (balance owed vs. current value), just sell the dang thing.

Well - I am pretty sure if you don't make the first three payments the mortgage company you use would be buying the loan back.

So your not just messing with yourself but the mortgage company.

You have listed a lot of "Lets Say (meaning lets pretend?) and "lets assume" and "this is hypothetical" -

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