“We’re very upside down on our home and are considering buying another home, then letting this one go. Any advice?”
Answer:
You’re talking about what we call “buy and bail.” As I’ve said before, it’s not my place to judge. If I was in your situation, who knows what I’d do.
Some challenges and things to consider:
– A new lender would give you extra scrutiny. They’ll probably require you to qualify for both mortgages. And they may need a reasonable explanation why you’re moving to another home in the same city.
– There are likely some California and possibly federal tax ramifications. You’d probably have to pay taxes on the lender’s loss.
– Of course, your credit will take a huge hit. If I recall, the credit expert I know (Derrick Evens) has estimated it to be 200 to 300 points due to the late payments and the foreclosure itself.
