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OK, I have always thought this must be an incredibly common question, but I am looking to hear how others have addressed this issue.
We currently own a modest home and want to move to another, larger house in the same town. We now owe roughly 60K less than we could get from selling our current home. We would like to buy a new home, move into it, and then have some work done to our old (current) home to improve its appeal to buyers. The market is very slow here, as it is most places, and to sell this house we need to maximize its appeal by moving ourselves out, refinishing the hardwood floors throughout, repaint some rooms, etc. So staying in it while it's on the market is not an option.
Have others in this situation had trouble getting a loan for a new house while they still own their old one? We are waiting to hear back from the mortgage broker at the moment but it's taking a while. We have very good credit, no car payments or credit card debt, and our current mortgage payments are very low because our ARM is only 3.125% at the moment. So we would not have problems paying two mortgages for 6-12 or more months if we had to. Also we have saved enough to put a 15-20% down payment down on the new house. So, in the current state of affairs, is this really that hard to do (get a second loan)?
Please don't do this.
You are asking for Trouble.
It wont work out like you expect.
you are inviting Murphy into your lives.
you will get less for your current home because....
The market is still soft.
And your attitude about your current home will change.
You will become a motivated seller and will ultimately take far less for this home than you have to.
Add to that the cost of updates and double payments and you are looking at a big financial hit.
All because you wanted the new home now.
Sell first.
Then buy.
simple, safe, and smart.
Sorry, tigger, I have to disagree. For SOME, that might be the best advice, but not for everyone. It sounds to me like the OP is very realistic about their expectations (assuming that the property value of the current house is coming from an informed source, and not wishful thinking). Not everyone is upside down on their mortgage, and not all markets are still falling. The OP isn't expecting the house to sell in 30 days, they are prepared for a long process, which is realistic.
To the OP.
If your income can support both mortgages, and you are comfortable in the stability of your job
AND if you have the down payment saved separate from the equity in the current home
AND if you have sufficient emergency savings in case you lose your job or take a cut
AND if you are being realistic on the value of your house in today's market (hopefully this price is coming from an appraisal or real estate agent familiar with the market, and not from Zillow or the tax assessor)
AND if you are emotionally prepared to deal with this money flowing out every month on both houses
Sorry, tigger, I have to disagree. For SOME, that might be the best advice, but not for everyone. It sounds to me like the OP is very realistic about their expectations (assuming that the property value of the current house is coming from an informed source, and not wishful thinking). Not everyone is upside down on their mortgage, and not all markets are still falling. The OP isn't expecting the house to sell in 30 days, they are prepared for a long process, which is realistic.
To the OP.
If your income can support both mortgages, and you are comfortable in the stability of your job
AND if you have the down payment saved separate from the equity in the current home
AND if you have sufficient emergency savings in case you lose your job or take a cut
AND if you are being realistic on the value of your house in today's market (hopefully this price is coming from an appraisal or real estate agent familiar with the market, and not from Zillow or the tax assessor)
AND if you are emotionally prepared to deal with this money flowing out every month on both houses
Then I say go for it.
You say that you Disagree.
But then you exactly make my point with your long list of things that need to be in place for this risky deal to have a happy ending.
Did you notice your long list of ANDs?
That means that if any one of these are missing its not a smart move.
You just eliminated 97.2% of the population.
What you really mean is that for MOST people Tiggers advise is the best advise.
What you really mean is that there is a very small minority of people so totally together financially that they can answer YES to every one of your requirements. And for them Tiggers answer is not applicable.
What you really mean is "Yes Tigger I totally agree with you because you are wise beyond your years".
Why can you not fix it up while still there? It's not like you said you had to completely redo the house. You said the floors and paint. That's pretty funny to say you can't live there and do this. And you will not be guaranteed to make money off these improvements or even sell your house quicker. Try getting a real estate professional over to tell you what they think?
You say that you Disagree.
But then you exactly make my point with your long list of things that need to be in place for this risky deal to have a happy ending.
Did you notice your long list of ANDs?
That means that if any one of these are missing its not a smart move.
You just eliminated 97.2% of the population.
What you really mean is that for MOST people Tiggers advise is the best advise.
What you really mean is that there is a very small minority of people so totally together financially that they can answer YES to every one of your requirements. And for them Tiggers answer is not applicable.
What you really mean is "Yes Tigger I totally agree with you because you are wise beyond your years".
There I fixed it for you.
My point is that you said a blanket "don't do it" Period. You are stating it is the wrong move for every single person, and besides being a false statement, you can't possibly know if it is the wrong move for the OP.
We have no idea what the OPs financial situation is. It is entirely possible that they do meet that full list. They already said they meet some of those criteria, and they didn't specify on some of the others, so we can't know. If they do, great, they should go for it. I think your "97.2%" is an extreme exaggeration, myself.
My point is that you said a blanket "don't do it" Period. You are stating it is the wrong move for every single person, and besides being a false statement, you can't possibly know if it is the wrong move for the OP.
We have no idea what the OPs financial situation is. It is entirely possible that they do meet that full list. They already said they meet some of those criteria, and they didn't specify on some of the others, so we can't know. If they do, great, they should go for it. I think your "97.2%" is an extreme exaggeration, myself.
Yes I can say without fear of successfull contradiction that only a fool or a millionaire buys a home before selling in this market.
And the Millionaire may be the fool for doing it depending on their asset allocation and liquidity.
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