Contributor
runNL8
Posts: 75
Registered: ‎10-30-2007
Want to buy a new Home but can't sell Current House

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................?  

Frequent Contributor
rockymtngrl
Posts: 337
Registered: ‎09-24-2008
Re: Want to buy a new Home but can't sell Current House
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.
Moderator Emeritus
Lel
Posts: 5,267
Registered: ‎03-18-2008
Re: Want to buy a new Home but can't sell Current House

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. 

Contributor
runNL8
Posts: 75
Registered: ‎10-30-2007
Re: Want to buy a new Home but can't sell Current House

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...........

Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
Re: Want to buy a new Home but can't sell Current House

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

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Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008
Re: Want to buy a new Home but can't sell Current House

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. 

Senior Contributor
MattH
Posts: 3,240
Registered: ‎04-03-2008
Re: Want to buy a new Home but can't sell Current House

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.

 

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Contributor
runNL8
Posts: 75
Registered: ‎10-30-2007
Re: Want to buy a new Home but can't sell Current House

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.

Established Contributor
SonorityGenius
Posts: 729
Registered: ‎10-21-2007
Re: Want to buy a new Home but can't sell Current House

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.

Senior Contributor
MattH
Posts: 3,240
Registered: ‎04-03-2008
Re: Want to buy a new Home but can't sell Current House
[ Edited ]

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
TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it