topic Re: Want to buy a new Home but can't sell Current House in Mortgage Loans

Want to buy a new Home but can't sell Current House

runNL8 — Fri, 24 Jul 2009 05:19:06 GMT

We have out grown our home and DW and I are tring to figure out a way we can buy a bigger home to suit our needs and accommodate our growing family. Our current home is worth $30K less then what we originally mgt so selling it is out of the question (I think).

I was thinking that my only other choice to make this work is to rent it out, and then see if we could get pre-approved for another mgt. Has anyone done this? What are some of the stipulations and requirements to get an approval from a lender?

Do I have any other options................?

Re: Want to buy a new Home but can't sell Current House

rockymtngrl — Fri, 24 Jul 2009 13:02:15 GMT

In order to buy a second house you need to have a good bit of equity in the first house, I'm thinking its something like 20-30%. They are doing this now to try and prevent people from buying a second house and then renting out the old one for a year and then walking away from it. Sorry.

Re: Want to buy a new Home but can't sell Current House

Lel — Fri, 24 Jul 2009 16:43:57 GMT

Second homes frequently require hefty down payments as well.

You could consider a short sale. If you are not delinquent on your current mortgage, then there would be no waiting period before obtaining a new mortgage. However, your FICO scores will suffer greatly after the short sale is completed, which could make obtaining a new mortgage more difficult.

Re: Want to buy a new Home but can't sell Current House

runNL8 — Fri, 24 Jul 2009 19:24:53 GMT

We have never missed a payment so we're good there. My FICO scores are 698-716 and DW is 710-730.

If we did a short sale would we still be required to pay back the negative difference before getting a new mgt, or do they just apply the neg. equity to the new mgt, for example: I owe $300,000, short sale price $225,000, Do I need to pay back that $75K before I can get approved for a new loan or will it tac on to the new loan?

Thanks...........

Re: Want to buy a new Home but can't sell Current House

BrianB_The_Loan_Professor — Sat, 25 Jul 2009 07:52:32 GMT

It depends on your local laws as far as what happens with the diff

In CA they cant come after you for the loss

Either way they can't attach it to a new home completely seperate

Re: Want to buy a new Home but can't sell Current House

mickie08 — Sat, 25 Jul 2009 15:37:33 GMT

Also, it's quite possible a lender may require you to miss a payment, etc prior to accepting a short sale. On top of that, different loan programs have different waiting periods between completing a short sale and buying a new property. You would need to sell the first house first and allow it to clear on your credit report as paid or they are going to hold you to the mortgage. Once it shows on your report it will show as settled for less than owed. Some, if not most loan programs then will require a waiting period before purchasing between 1-3 years I believe. They will make exceptions for extenuating circumstances such as a job transfer and the like but I don't believe wanting a bigger house qualifies unless you were in a 2 bed condo and just had a couple kids or something.

The other thing is, the lender is likely to want to see your financials prior to approving a short sale. If you have money put away somewhere for the down payment you will need for moving costs and the second home, they are not likely to allow you to settle the debt you owe.

Re: Want to buy a new Home but can't sell Current House

MattH — Sat, 25 Jul 2009 21:30:58 GMT

runNL8 wrote:
We have out grown our home and DW and I are tring to figure out a way we can buy a bigger home to suit our needs and accommodate our growing family. Our current home is worth $30K less then what we originally mgt so selling it is out of the question (I think).

I was thinking that my only other choice to make this work is to rent it out, and then see if we could get pre-approved for another mgt. Has anyone done this? What are some of the stipulations and requirements to get an approval from a lender?

Do I have any other options................?

Hmm, it sounds like you are stuck, as others have noted you probably cannot buy another house any time soon unless you have equity in this one. Perhaps you can find creative ways to make better use of the space you have now.

This book is my absolute favorite book on how interior design can maximize the use of space, it's a decade old now and out of print but used copies are available. Her focus is on principles not products so the book's age is not much of an issue.

Re: Want to buy a new Home but can't sell Current House

runNL8 — Sun, 26 Jul 2009 03:52:47 GMT

MattH wrote:
runNL8 wrote:
We have out grown our home and DW and I are tring to figure out a way we can buy a bigger home to suit our needs and accommodate our growing family. Our current home is worth $30K less then what we originally mgt so selling it is out of the question (I think).

I was thinking that my only other choice to make this work is to rent it out, and then see if we could get pre-approved for another mgt. Has anyone done this? What are some of the stipulations and requirements to get an approval from a lender?

Do I have any other options................?

Hmm, it sounds like you are stuck, as others have noted you probably cannot buy another house any time soon unless you have equity in this one. Perhaps you can find creative ways to make better use of the space you have now.

This book is my absolute favorite book on how interior design can maximize the use of space, it's a decade old now and out of print but used copies are available. Her focus is on principles not products so the book's age is not much of an issue.

thanks for the link.

Re: Want to buy a new Home but can't sell Current House

SonorityGenius — Sun, 26 Jul 2009 11:33:13 GMT

Short sale will also ruin your credit.. I remember once a broker stated Short Sale is considered as bad as a foreclosure..(not sure at present...)

I would just stay put and wait for equity..... maybe get a HELOC and do an addition on your current home if feasable.

Re: Want to buy a new Home but can't sell Current House

MattH — Sun, 26 Jul 2009 12:41:36 GMT

SonorityGenius wrote:

Short sale will also ruin your credit.. I remember once a broker stated Short Sale is considered as bad as a foreclosure..(not sure at present...)

I would just stay put and wait for equity..... maybe get a HELOC and do an addition on your current home if feasable.

I considered suggesting original poster add on current home, but decided not to make that suggestion for the following reasons:

Original poster says they don't have equity right now, so HELOC won't be possible until they do have equity
In a soft market, the return on investments from improvements to an existing house is not very good. In general, a square foot of space that was part of the original structure will bring more in market value than will a square foot of space that was added later, and in a soft market buyers will be even more reluctant to pay for added-on space.

For similar reasons, I didn't suggest original poster simply take a loss on the house by making an extra principal payment on the mortgage: if original poster had that kind of cash available they would not have posted a request for suggestions. My suggestion of trying to think outside the box and maximize the space they have was based on the premise that in their position anything requiring lots of cash probably is not feasible.

I do have some in-laws who doubled the size of their home a few years ago, but they were in a particular situation where the usual market considerations were not a factor for a number of reasons. First of all, they live in a rural area that never had a boom, so they had no expecation of making money on the project. Second, for the same reason the cost of adding onto their home was much less than it would bein most places. Third, this house is on land that has been in the family for over a hundred years and therefore has far more sentimental than economic value for them. Fourth, they had the cash to build the addition without borrowing any money. Fifth, they plan on retiring in this place, and therefore do not anticipate selling the place any time soon.

Message Edited by MattH on 07-26-2009 08:41 AM

Re: Want to buy a new Home but can't sell Current House

Uborrow-Upay — Sun, 26 Jul 2009 18:27:07 GMT

MattH wrote:

Hmm, it sounds like you are stuck, as others have noted you probably cannot buy another house any time soon unless you have equity in this one. Perhaps you can find creative ways to make better use of the space you have now.

No further comments, I've learned to stay out of the "wants vs. needs" discussions. (Big round of applause heard here...)

Carry on...

Re: Want to buy a new Home but can't sell Current House

runNL8 — Mon, 27 Jul 2009 03:12:40 GMT

Thanks for all the suggestions.....I did consider a HELOC, but as already stated by someone else we have no equity built up. We bought our home 6 yrs ago, the market crashed and now I'm upside down by about 30K.

On top of all that I have an ARM that is due to rest in October of this year and then resets every 6mo thereafter.

Luckily for me I am still in a position to afford the payments IF my rate went to the maximum interest rate stated in my loan contract. I don't know if this is true but a friend told me my monthly payments might even come down a little since my reset rate will be determined by current LIBOR rates. Anyone know any truth to this?

Thanx

Re: Want to buy a new Home but can't sell Current House

medicgrrl — Mon, 27 Jul 2009 03:29:40 GMT

runNL8 wrote:
Thanks for all the suggestions.....I did consider a HELOC, but as already stated by someone else we have no equity built up. We bought our home 6 yrs ago, the market crashed and now I'm upside down by about 30K.
On top of all that I have an ARM that is due to rest in October of this year and then resets every 6mo thereafter.

Luckily for me I am still in a position to afford the payments IF my rate went to the maximum interest rate stated in my loan contract. I don't know if this is true but a friend told me my monthly payments might even come down a little since my reset rate will be determined by current LIBOR rates. Anyone know any truth to this?

Thanx

Very possible your rate could go down. Based on todays rates, my sisters rate would go from 5.875 to 4%. Her loan is due to reset in September. I can't remember if hers is based on LIBOR or the 1 yr TBill. You would have to look at your Note and see what the margin is and see what the current LIBOR is to determine what it would be today....obviously this will change over the next few months but will at least give you an idea of where you would be sitting if all remains as it is for the next few months.

Re: Want to buy a new Home but can't sell Current House

whtsista — Sat, 01 Aug 2009 18:22:36 GMT

runRN,

Please don't take this the wrong way, but your other option is to stay in your current house, and be thankful that you have a home for your family. Of course you may feel like you have outgrown it, as you had more childrena nd accumulated more things, but does your home keep you warm, and secure? I really don't understand when people keep one house, and buy another one to live in, counting on the rent to cover the first house payment. I live in Ca, and in 2005 I rented a house from a family taht said it was way too small for them, they would never move back into it, but it was their first home, so they didn't want to sell it. I was paying 1500 a month, knowing that was more than their mortgage. Fast forward 2 years to 2007, and I receive a letter in the mail stating that their second house is in foreclosure, and they have to move back into their first house-remember the one that was way too small and they would never move back into. Let's not forget the for sale signs in both of their late model auto's-an suv and a full size truck. Last time I checked, they filed Bankruptcy. When our grandparents were growing up, they didn't have McMansions-they more than likely didnt even have their own bedroom, and undoubtably once they acquired in home bathrooms, they only had one.And they survived. They had all they needed, just not all they wanted. I know this was long winded, but I think a lot of us a lot of the time, myself included confuse needs and wants. Clear out some clutter. Have a garage sale.Wait until you have more equity in your house, and then sell if you must, but please don't buy another home banking on renters to pay the mortgage. What happens when they don't pay it? What hapens when they move in and destroy your home, because noone takes care of your stuff like you do. What would happen if they turned it into a meth house?Or burned it down? The list is endless, and once it happens it is too late. Just some things to think about. Good Luck!