selling at a loss question

[lavagirl]

Hi,

I have a property that I am barely breaking even on and that is probably worth 20k less than what I owe on it. I would like to get rid of it asap. My question is- is it better to bring cash to closing or to pay down the mortgage now while i have a renter in it?

[DoubleDown]

Assuming you sell soon, it likely doesn't really matter. I'd be inclined to hang onto the cash until your actual closing. That way you'll have it in case any other kind of emergency pops up, you can make a couple of extra dollars in interest, and you'll know exactly how much to bring once you're actually ready for settlement.

Good for you for dumping the losing property and not hanging onto it for emotional reasons or in vain hope it will recover somehow.

If you haven't already investigated it, and assuming you have a mortgage lender, I'd highly suggest looking into a short sale. The bank may be willing to eat some of those losses rather than have you walk away from the property. I realize you're not considering walking away from it, but they don't know that.

[lavagirl]

Thanks so much! I haven't considered a short sale since I'm not in financial hardship. How do I go about asking for a short sale if I have decent income?

[arebelspy]

Thanks so much! I haven't considered a short sale since I'm not in financial hardship. How do I go about asking for a short sale if I have decent income?

The bank probably won't go for it.

And is it worth the hit to your credit for only 20k if you make a decent income?

(Also are you in a recourse, or non recourse state?  Cause the bank could go after you for the short amount anyways.)

We'd need more details on the property (amount you owe, amount it's worth, mortgage payment - how much to principal and how much to interest, rental amount, etc.) to give a more nuanced answer regarding rent v. sell.