I want to purchase another home, my present home won't sell for what I owe. What can I do in this situation?

Question

I want to purchase another home, my present home won't sell for what I owe. What can I do in this situation?

Answer 1

You pay the difference between what you own and the sales price in cash or you take a big risk and put yourself in a position for a short sale.

For a bank to agree to a short sale, you have to be behind on your payments. Getting behind on your payments is no guarantee a bank will approve a short sale. You can just as easily (and I think more likely) end up in foreclosure going this route.

A short sale will have a negative impact on your credit, which may make it difficult to get that next mortgage loan.  You also have to be able to prove financial hardship for the bank to allow it.

If you’re just moving because you want to, not because must or you can’t afford your current loan payments, consider staying  unless you have the cash to pay off the rest of your current loan.  

Answer 2

ok j98 has a solution but the only other option is to get an unsecured loan for the balance of the first home so you can deliver good deed at close. But that will be added to your debt to income ratio on the new home and may disqualify that purchase if your DTI is to high. Renting it may be your best option unless you have already accepted the buyers offer then you can be sued for backing away.

Answer 3

You should consider staying in the home until the market changes. If your home has been listed over 6 months, take it off & later down the line put it back on the market. Do not leave your home on the market for years at a time. It will never be sold!

Answer 4

you're SOL - you won't be able to get another house without paying off the first one in full, otherwise your credit will take a major hit and bank may come after you for remainder of money owed

Answer 5

Offer it on contract, give the occupant 2 years to get a loan, or you can rent it, consider hiring a management company to take care of it.  I doubt an investor could help, but it's worth a try.

Answer 6

I just went through this so I'm renting out the old home until the market recovers. If I sold it now I'd really take a beating but I have 3 years for the market to recover and that's a fairly safe bet. The same applies to you. If you live in the home 2 out of the last 5 years you don't have to pay capital gains tax so, if you sell it any time during the next 3 years you're still off the hook for paying taxes.

It's easier than you think to have two homes because the old home will generate rent which the lender will count towards qualifying the new home. Shop around for a good mortgage company. The right mortgage broker really makes the process eaiser.

Answer 7

Well, you're upside down on your home.  You can't buy another home until you get out from under the first.  Can you rent it for the mortgage cost?  But even if you rent it, you probably can't qualify for a second home.  

To get out from under your current home you have several options:  

1.sell it and make up deficiency

2.short sale it--requires bank agreement

3.deed in lieu of foreclosure--requires bank agreement and arrears

4.stop paying and let it go into foreclosure

The problem is that 3 and 4 will mean you can't get a mortgage to buy another home and 1 and 2 could mean you won't qualify as well.

My advice is:  if you can afford to pay your mortgage, stay where you are now, and wait for market to improve.   You don't say why you want to buy a new home--from your post, it's NOT a good time for you to buy a new home.   Otherwise you are impairing your credit and starting all over again.

Answer 8

Well you can do what I did, but it;s a little tricky. Put it up for rent until the market changes. I don't get enough rent for my condo but what they pay covers the mortgage at least, not including the HOAs and taxes. Can you do that? If I were you though, I would wait. It's been really stressful and we are living check to check with a baby on the way...