rulyg80, who is a new user of Zillow Advice, asks:

Should I Buy a 2nd Home Now Even Though I’m Upside Down on My Home?

Further, he says:

With the market the way it is, I would really like to get in on buying a new home… I would rent the home I own now, but would have to pay a difference of about 1,000 to my mortgage.  My home is under my name, but would buy 2nd home under wife’s name.  we both have income.

Tempting, isn’t it? The market is a buyer’s market and mortage rates are historically low, but this wannabe buyer is already in trouble with an upside-down mortgage.

What do you think? Crazy or worth the risk?

  • Brandon Green

    There’s no easy way to answer this question with just the information provided.

  • suze, 100% Mortgage

    Depends on a whole range of financials. Whether there is negative equity on the current house or not, if the new one has investment potential and is in a desirable area, what you short and medium cashflow needs and cash injection abilities are, job stability.

    What happens if the market drops further, how does that affect you?

  • Josh

    I say, “do it!” We tried to do the same thing ourselves but missed the debt to income ratio cutoff by 6 percent…meaning the bank would not loan on the second property. Some say it’s too risky (some including the bank!), yeah but I say take the risk if you’re allowed to. My opinion is: the market WILL turn around, and when it does you’ll find that you’ll have substantial equity in both homes. I’m scrambling to get my ratio lower so that I won’t lose the next house that we want to write an offer on. -Joshmele’at’

  • DebtFree

    Do it, please. I’m in the market for foreclosures, and this would add two more units to foreclosure inventory in the next 6-12 months.

  • abe vigoda

    So let me get the facts straight.

    1. You bought a primary residence in your name only.
    2. That residence is worth less today than when you bought it, resulting in NEGATIVE equity.
    3. You want to buy another house under your wife’s name only.
    4. You then want to rent out the primary residence at a $1000 a month NEGATIVE cash flow, adding to your NEGATIVE equity.
    5. You will them move into the 2nd home and pay that mortgage.

    It sounds like you are trying to defraud the system by claiming two primary residences- one for you- one for the wife. Then it sounds like you are going to let the first house go after moving into the second house.

    Why would anyone want to rent out an existing house they have negative equity in at another $1000 a month negative cash flow so they could purchase another house, unless they planned on letting the first house go?

    See you in jail.

  • RB @ RichBy30RetireBy40

    No brainer! Just b/c you bought at a bad time, doesn’t mean you can’t buy at a good time!


    Rich By 30 Retire By 40

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