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Can anyone advise?! Here's my dilemma - I currently have a home that I would really like to sell. My family and I will be moving to Atlanta in the next few months and would rather sell it than rent it. My mortgage loan balance is $245,000 and I have a home equity loan balance that is $35,000. So, that makes the total owed approx. $275,000. For the two loans we pay around $2400 a month. Last year we could have easily sold our home for $325,000. However, with the current market, homes in my area are selling from $290,000-$300,000.
Next, we found some new homes in Atlanta that we really like. The builder is offering some nice incentives. We've done our research and found that the builder (as well as the location) is pretty steady. The house we like will cost around $275,000 - $290,000.
Our dilemma(s) is:
1. Should we press ahead and sell our current home or should we just rent it out and try to sell it once the market turns around?
If we rent it out, we plan to refinance it to combine the two balances so the payment will be lower. In our area, home rentals are going around $1800-2200 a month.
2. How would the above scenario factor in if we wish to press ahead with the new builder? Will having our house here as a rental help or hurt us? Would they even consider it?
3. How should we go about financing? We financed our current home through traditional financing. However, we are retired military and can still use VA financing. Should we use the VA loan to combine the current loans or should we use it for the new build? On one hand we were thinking of using it to combine the two so it would knock off the PMI and give a lower monthly payment (especially if renting). On the other hand, we were thinking that our VA loan would help us better if trying to get the new house built in Atlanta, although the builder seems to give more incentives if using their lender.
Can someone please provide sound advice, as we are really unsure what steps to take. Not sure how this factors into the puzzle but our income is approx. $128,000 (before taxes) and our bills (vehicle & credit cards) are approx. $600 month; our credit is pretty good (around 730). How would this all play into it?
My opinion is sell it. Price it aggressively and get rid of it. The market is not getting better anytime soon. While it varies from regional market to market, it is overall not good. What if you rent it and now and 1 year later it is only worth $260K?
If you are going to refinance, and buy in a new area.... be careful. the lender will want to know that you are doing an owner occupied refinancing..... that you aren't planning to, oh rent it out and buy a new home!!!
There is a lot to factor in with these questions.
#1 is if the market will bare the cost of the 2nd mortgage payoff. With the market settling down to a spokane standard, many home owners will need to short sale the loan which leaves zero equity for a seller....this is mainly a factor with owners who have purchased homes at elevated prices over the last 3 years and added 2nd mortgages to the inflated value which is why were are now seeing the bailout from the gov't
#2. are you prepared to manage the property from that distance? if repairs are needed from tenants living in the home and you decide to sell in the spring or when the market is hotter; will you be in a position to do some TLC? The rental market is very strong however with the buyers market
Your income/debt ratios look nice with the credit so it mainly comes down to what you owe now and what the market is willing to bare.
Jeff Crane
Crane Real Estate Group
#3 if you list the home now, you will not be able to refinance as the lender will run a search to see if the home is listed.
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