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Should I use savings to sell home or use for down payment?

I currently have a home in another state which is being used as a rental.  Unfortunately, I am underwater on that home and the rental income does not fully cover the mortgage.  Financially I can pay rent in my current state and the mortgage in the other state (without the rental income).  My question is: should I put my current house on the market and possibly have to pay the difference in the sale, which could be up to 20,000, or should I keep the house and use the money for a down payment on a new home?  Am I throwing money away with a rental that doesn't pay the full mortgage or will it pay off in the long term? 
  • May 01 2013 - Charlestown
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Answers (5)

I did some research on the Springfield MO area and it appears that homes in that area are not appreciating very quickly, although they are moving in the right direction.  The expected appreciation is about 1% for 2013.  A local Realtor in that market should be able to give you better information on your specific home and its value.  When you speak to the local Realtor be sure to get information from a few as each may bring different experience and information to you about the market and the trends.  

I have to agree with Wendy.  If you can wrap your mortgage this might be the best of both worlds.  You might be able to sell the home for more then you owe and get enough down to add to your new homes down payment.  Here in Phoenix the market is feast or famine.  During the leaner times investors were selling homes above current values with 10 - 20% down and then they would wrap the mortgage.  If your state does not allow for you to do that then I would speak to a lender and see what would work better for getting a loan on your next home.  They may want that other home off your books depending on your debt to income ratio or may require the saving for a down payment.  
  • May 26 2013
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Have you considerd selling the rental property while holding the mortgage yourself. Then you will have the downpayment from the sale of the rental to use toward the purchase of a new home or use in any way you wish with the benefit of making an above market interest rate of return.  Of course, consult with an attorney to help you draw up a solid plan.
  • May 15 2013
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The rental is located in Springfield, mo. While my home and the ones in front of me are more valuable, the homes behind me are 40-50 thousand dollars less.
  • May 01 2013
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What state is your other home located in?
  • May 01 2013
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I would keep the rental and use the money to purchase yourself a home
here. It seems to be a sellers market everywhere and  feel property values are increasing. Purchase here while you can still get a great rate and follow the market on your rental and you may be able to sell within a few years or less, depending on the market where it is located.  Hope this helps. Good luck.
  • May 01 2013
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