Need help! Short sale or stick with it?

[NotFree]

Here is my situation:

Lost job-still applying but only a few contacts have happened - will likely have to move out of state when something is found...

 

Plan was to use severance to pay off 2nd mortgage. 1st mortgage is actually a home equity loan. It is not backed by Freddie or Fannie so doesn't qualify for Harp. The lender said they could refinance at 4% (it is now 6.75%) but would only go 15 years, so the payment would be actually the same with the exception of having to pick up mortgage insurance. They are offering no other options. We tried to refinance a few years ago and were told "can't help you because you are not delinquent." The payments are currently made through June.

 

Our new thoughts are:

-pay off 2nd and stick with the HE until balloon is due in 4 years and hopefully get financed then and hopefully be able to scrape up the money for the payment

-bank the money and not pay off the 2nd and tell the lender, let's do a short sale and move about our business

-pay off the 2nd and still go the short sale route only taking the one ding on the credit instead of 2

 

I am really struggling with why refinancing is so difficult for us. Both of our scores are over 800.

 

Thoughts?

[coachtom2183]

I would check with another lender if your scores are so high.

[NotFree]

I did check with a few other lenders. They are telling me since I don't qualify for HARP and don't have a loan with them now that I can't qualify for their version of the HARP since they can only help those that are underwater that are their current customers.

[coachtom2183]

Maybe one of experts will jump in here

[Em n EM]

have you considered a bk to strip the 2nd mortgage