Question on selling your home and buying one in this market when house is underwater?

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I may be forced to move due to job reasons and have a question that I am sure is pretty common out there. We bought our home in 2007 for $ 273K. I have been told it would now sell at around 240K. We put down 5% and our current mortgage is for 250K We have never missed a mortgage payment and are financially stable. My question is, lets say we sell the house at 240K.

We now owe both real estate fees and 10K on the mortgage. Is there a way to carry over that 10K on our new mortgage and are banks real tight on lending to people now who cannot put down 20 or so percent? We will have no money to put down from our original home(we would actually lose money) Again, we are fine paying our mortgage now and are in our 30s. Earned more than 100K the last two years and new job would pay about 30K more.
Can I not move now do to the decline in housing? Am I stuck?

Any real estate professionals with advice?

1 Comment
  1. Reply
    good guy
    July 21, 2011 at 2:15 am

    i know it’s of little consolation, but you are in a rather large group of people who are also upside down with their homes. That said, if it at all possible, keep your present home and consider renting for a year in your new location. If you can find a good realtor, ask him/her to explain a lease/option method of selling your present home. This L/O is a good selling point, but most agents will dismiss this method, since they will have to wait about a year for their commission, hence, MOST agents will say a L/O is not a good method. (these not-so-good-agents will never come right out and SAY why they don’t like the L/O method, though). At any rate, keeping your underwater property will bring you back (eventually) to where you will be in a rightside-up position, and you’ll be glad you waited. By renting in your new location, you’ll be able to save (in theory) some money to put towards a down in your new city. Finally, by renting/leasing your present property, you will be turning it into an investment, and you’ll reap many more tax benefits than you now enjoy with said house. A good agent/tax adviser can explain these “new” benefits. All in all, if you can afford to keep your present property, that’s what i’d suggest doing.

    as for rolling over your potential “loss” obligation into a new loan, i doubt seriously this is even a remote possibility. And getting a “new” loan will be difficult when a lender learns you are upside down with your present house. You are in a tight spot, but it’s not as bad as it seems, especially since with your income, you appear able to weather the problem financially, and things are slowly getting better. (true, america is still not out of the woods yet, but that’s a whole different topic). Good luck.

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