Is it possible to sell your home for less than what you owe?

Question

Say your home is worth 300,000 but you can only sell it for 270,000. Is it possible to buy another home for 290,000 and put the 30,000 owed on the first loan on the second?

Answer 1

First, you'll need to put a down payment when you buy a house. Even you can find a lender to do a 100% mortgage, they won't let you cash out at closing with a purchase. So technically, you cannot transfer the $30,000 owed to your new house to pay off later. In order to sell your first house, you need to either short sale (which need lender approval and you have to submit a lot of document to show you're in financial hardship) or pay $30,000 to cover the difference at sale.

Answer 2

What matters is the loan-to-value ratio on the new home that you're buying.

If you are not planning on making a down-payment, the additional $30,000 debt would put the LTV on the new home at nearly 100% (or more).  

Now, banks like to keep the LTV (even on a second, higher-int. loan) at 95% or lower.   A loan with an LTV over 100% would be hard to find, is risky for everyone, and would likely have a very high rate.

Good Luck

Answer 3

No lender will do that or ever has. You were able to borrow more than what your home is worth at one time, but not during a purchase transaction. You will have to do a short sale.

Answer 4

The other two are correct.

To answer your title question (ignoring details) of course you can sell for less than you owe, you just need the cash to cover the difference.

Answer 5

Ther have been many cases where the bank will accept less (short sale) but it's usually to avoid a foreclosure.

Answer 6

YES

NOPE

KEY info missing:  how much is existing mortgage?  If $300,000:

you sell your first home, short sale, you come up with difference in cash, or you don't--with bank cooperation

then buy second home IF you can find a lender

Answer 7

No.

Answer 8

Afraid not. Each loan is legally tied to each property.  What you are indicating is you are upside down in your loan. Which millions of us are. To sell it short of the mortgage balance requires your lenders approval.  Without it, they can and will file a 1099 form to the IRS grossing up your income by the difference. However, if they agree to a short sale, then typically they don't file this form. It's not easy getting them to agree and it takes time.

Answer 9

I' sorry BUT that just is not going to happen .....

You need to shop around for a home that you can actually afford with the money that you have ....