Profile picture for missinglink64

I want to sale my house but I owe more than it is worth. Can I buy a diffrent house

  • September 25 2010 - US
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Answers (13)

Best Answer

To keep this answer simple - no, most likely you cannot buy another house unless you sell the one you currently have.

If you owe more than it is worth, you have several options:

1.stay in the home and keep paying your mortgage until the value has increased
2. sell it if you can come up with the extra money you will need to bring to the closing table
3. look into a "short sale:" which means you will be asking the bank to take less than is owed - in order to qualify for a short sale you will need to prove some sort of hardship (medical issue, job loss, inability to continue paying the mortgage, etc).

Speak with an agent or real estate attorney to see which options work best for your particular situation.

Best wishes......
  • September 25 2010
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Although the short answer is no... if you short sale, you can in a couple years get a loan and purchase another home... run the numbers and see what works best for you.. good luck... need refrence email me...
  • October 01 2010
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Profile picture for TeamSandyBlanton
There's always exceptions to the rule. Here's one to consider:

Can you afford to rent out your current home and purchase another?

I'm working with a couple now that bought their home during the peak of the market. The home is no longer worth what they owe on the mortgage and they'd like to purchase another. Standard reasoning would say this isn't a good idea but their circumstances aren't typical. These buyers have strong finances and can qualify for another mortgage while renting their current home with a small monthly loss.

These buyers want to take advantage of the lower prices and buyer a larger home in a more desirable area. Since they can afford the montly loss and are not in a financial bind, who's to say this is a bad move on their part?

Again, the above situation is far from "normal" in today's market but every situation should be looked over individually.
  • September 28 2010
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Short Sale is a option,or if you have the cash to pay the difference that is a option as well

  • September 28 2010
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Profile picture for Joe C Chen
This is a very common question I get asked all the time.

While you have an upside down house, it's very difficult to get another loan for a new home purchase, as lenders these days care a lot about your equity in an existing property.

Most people in the similar situation will just complete a short sale and try to recover their credit over 2 years and come back to the market again.  The home values in many areas are continue to drop, so it may be worth the wait.
  • September 27 2010
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Profile picture for hpvanc
I have one question, for the OP, and maybe they have already considered it and the answer was no.

Can you rent it at a profit or break even?  If so this is an alternative, I would not consider renting in a falling market if you can't do so at a profit.  Otherwise, unless you have other assets to cover the loss, and to use for a downpayment, I believe you are stuck.

If the reason for selling is that you have to move due to a change in life circumstances, then you should get on with the consequences sooner rather than later.  There are many consequences, and if you need security clearances or bonding for your profession, there is no good option.  Unfortunately there does not seem to be appreciation in the next few years to help dig you out of this bad situation.
  • September 26 2010
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Back to short sales - I do agree with Michael in that many consumers don't understand what is involved in a short sale or what the consequences are. In fact, all too many see it as an EASY way out - as those of us who have tried to bring a short sale to the closing table know, it is anything but easy or quick, nor is it a sure thing.

It is frustrating and disturbing, to me,  to read consumer comments and  questions here and on trulia that look at short sales  (and buying a new home immediately thereafter) as the easy way to go........what is even more disturbing, is seeing agents advising them, or implying,  that a short sale is available for the asking.
  • September 26 2010
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Haha - sure Alan - changing "wives" is done on a daily basis (lots of men try to trade up for a newer model, in wives and cars!), but it may cost you more money in the end than keeping the original one! Think long and hard about it  before you replace her - and be careful of what you wish for.............otherwise - have I got a div. attorney for you!

(just having some fun here)
  • September 26 2010
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Profile picture for Alan May
I want to get another wife, the one I have is costing more than I thought!  Can I get a different one?
  • September 26 2010
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Profile picture for Dunes....
I think every one who has responded so far true intention is to give helpful advice, I do think however Michael is pointing out a legitimate concern..

Each Question is a new voice who may not be aware of or understand issues/consequences we take for granted and Decisions like this need to be made by an informed person who understands everything or knows there are things to check out that can be affect their decision...
In other words when mentioning or suggesting a short sale a mention or pointing out of the Consequences of a Short Sale would be of definite assistance to the person making the decision..

I see no disagreement here or any intended slight..just a reminder that perhaps this is a option that when suggested should be Fully explained
Advantages and Disadvantages/Consequences

I just see 3 Agents trying to give helpful honest advice, 3 Agents who unlike some represent their Profession the way it should be

Just my 2 cents and TUs for all..just cause I can

  • September 26 2010
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Michael, I don't think either Christine or I were suggesting that  short sales didn't have pitfalls -  they are certainly not a panacea , but rather a possible way out for those who can no longer make their mortgage payments due to a hardhsip of some sort.

The specific quesiton above asks if they can buy a new home.
The answer is "it depends".

This person's bigger issue most likely  is what do to with their current home.
Unless they are flush with cash, in which case they can pay off their current loan and apply for a new one,  they need the advice of an attorney or at least an agent who can help them analyze their current situation. Certainly, there is too little information to advise them any further.

I would hope that anyone contemplating a short sale understands their credit will be affected for years to come, as well as any part of their lives where credit is necessary. A foreclosure has even longer lasting negative consequences on one's credit.
Neither option is the ideal solution to an unfortunate situation.
These are last resort options.
  • September 26 2010
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Please, please (everyone) understand.

If you sell your home in a situation where the lender has taken a loss (a.k.a. short sale) you will not be able to borrow money from a bank to buy again for at least two years - if not longer. Your credit will be damaged and that can also impact your ability to rent, your ability to get a job and even your ability to get a car or credit card.

This always seems to be the missing link in the generic postings from agents who advocate short sales. (While it's covered in this posting, it's often skipped in other postings). While there are some benefits to the consumer, there are pitfalls as well.

And while ignorance is good in some situations (like the characters in a horror movie). Being ignorant of the consequences of a short sale is just dumb.
  • September 25 2010
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Question is why would you want to? You're not the only one in this predicament. Do you have a hardship causing you not to be able to pay your mortgage? You can short sale your home, but you will need to show hardship and you probably won't be able to get another mortgage for 2-3 years. If you simply want a new home because this one is worth less than what's owed and you can afford your mortgage, it would benefit you to ride the storm. People bailing out of their homes just because they're not worth what is owed is one of the reasons our market is having the trouble it is. You need to weigh your options carefully, talk to an agent experienced in short sale negotiations if in fact you're having financial difficulty as well as your tax advisor and possibly an attorney so you are well aware of the ramifications now and in the future.
  • September 25 2010
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