Lender advised us that we can have two mortgages...

[Anonymous]

We have a home currently on the market and a home we are about to close on. Lender said we can afford two mortgages. I know we can. However, that means paying two mortgages until the house sells? Um.. not sure if I want to do that. I have two options here. 

1. Have two mortgages and move into our new home in June. Pay downpayment with our savings (don't like touching my savings). 

2. Lose the 7k earnest money, sit here until the house sells since it's under water, and then move to an apartment until we can find another beautiful home. 

Thoughts?

[Lemmus]

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@Anonymous wrote:

We have a home currently on the market and a home we are about to close on. Lender said we can afford two mortgages. I know we can. However, that means paying two mortgages until the house sells? Um.. not sure if I want to do that. I have two options here. 

1. Have two mortgages and move into our new home in June. Pay downpayment with our savings (don't like touching my savings). 

2. Lose the 7k earnest money, sit here until the house sells since it's under water, and then move to an apartment until we can find another beautiful home. 

Thoughts?

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...seems to me that the key is that your current home is underwater ...can you provide a bit more info on that?

...if you have any doubts about your current home selling at your price in a reasonable time, then its a lot different question in my view

...been there, even though I could afford it, it meant I had to forego other things ...not a good long term experience 

...is there any consideration of leasing your current home out until the market catches up?

[frugalQ]

if your home is underwater, and you have it on the market, are you doing a short sale?  if so, that can possibly that a while to complete AND it could have negative impact on yoiur credit score.

you are willing to just throw away 7k because you don't want to touch our savings?

ultimately, you will have to do what's best for you and your family, but have you considered renting your existing home?  that is what we did...turned our first home into a rental because we are underwater, and purchased a new home.

good luck!

[Anonymous]

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@Anonymous wrote:

We have a home currently on the market and a home we are about to close on. Lender said we can afford two mortgages. I know we can. However, that means paying two mortgages until the house sells? Um.. not sure if I want to do that. I have two options here. 

1. Have two mortgages and move into our new home in June. Pay downpayment with our savings (don't like touching my savings). 

2. Lose the 7k earnest money, sit here until the house sells since it's under water, and then move to an apartment until we can find another beautiful home. 

Thoughts?

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I am a little confused. If you are underwater, are you doing a short sale? Or are you paying the difference out of pocket between what you owe and the sales price to pay off your previous loan?

You can always temporarily rent out or do a rent-to-own agreement on your first home. If you plan to rent it out, you may want to consider a HARP refinance that we will do a refi even if you are underwater (though the program ends 12/31/15).

[StartingOver10]

How much is your current home worth? What do you owe on it? Trying to get to the amount you are actually underwater.

So you are under contract with a new home and still have the current home to sell? How is your market for resales and for rentals? Sometimes all you need to do is a rental for a year or so to get your home in the black so you aren't bringing money to the closing.

[Anonymous]

Hi everyone. 

Yes, home is underwater. We purchased the home at 417,000 at the height of the market before the crash, this is our very first home.  Now, we are selling it but I don't think we will get anything from it. We owe 390K however, I doubt that the house is worth 417K. Looking at the comps it's around 380K. This isn't the best location either. 

I never thought about renting it out but it sounds like a lot of work. I don't know if I want to short sale it. My agent told me to move into the new home and then short sale the other home. 

Homes are flying off the market within a few days here, not ours because we priced it high hoping to make some of it back. If I was to sell it for 390K, I might have to come up with some costs for the closing of this current home. That would stink because I'm already using my savings to move into the other home. 
The rental market is good. There was a house, same block that rented it out for the same price as our mortgage payment. Smalller than our home too. 

Any advice would be great. 

[Anonymous]

I'd rent it out for at least six months to see if the value creeps up to at least what you owe.

Better than a short sale or having to come up with $30k out of pocket.

[Anonymous]

Hey @dpeezy, 

I never thought about renting until someone mentioned it on here. Looks like the rent in the area is the same as my mortgage payment. 

I'm also aware of the property taxes, expenses and other things we may have to cover. We have a large savings so maybe we'll be okay to rent? 

Do we need to be prepare for anything else if we want to rent it out for long term? 

[Anonymous]

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@Anonymous wrote:

@Anonymous @Anonymous, 

I never thought about renting until someone mentioned it on here. Looks like the rent in the area is the same as my mortgage payment. 

I'm also aware of the property taxes, expenses and other things we may have to cover. We have a large savings so maybe we'll be okay to rent? 

Do we need to be prepare for anything else if we want to rent it out for long term? 

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You can either handle all duties yourself, or you can look into hiring a property manager to do so for you.

I would do some research on both options to see which would be more appealing to you.

[Lemmus]

...renting it out yourself means you are going to do the background checks on every applicant ...are you comfortable doing that? ...and it means doing the upkeep on the property because most states have some pretty tight regs on the landlord's obligations to the tenants ...are you comfortable with that?

...otherwise, find a good property mgr and let them do as much ...or as little ...as you'd like ...in most markets you can easily cover their fees in the lease 

...and don't even think about using your PITI as the basis for the lease price ...you have to include maintenance, mgt fees, marketing, and vacancies ...another area where a good property mgr can actually save you money

...I say this because my father owned a number of houses and tried to do it all himself ...tenants do the most absolutely insane things at the worst possible times, bad ones can destroy a home faster than you'd think possible, and the bureaucrats all think landlords are evil scrooges who deserve to be driven to bankruptcy because the fire-extinguisher was 2 mts out of date ...or the tenants raise rats, ants, and roaches as a hobby ...and rule #1 is that the tenant always calls on Sunday and/or in the middle of your kids birthday party ...and don't even think about evicting a non-payer ...and only god can help those insane enough to rent to family or friends, eh

...all those dire warnings aside, renting your home can be a very easy and profitable thing if you get the right tenants ...hth