Expert: Jessica Bryan - 1/9/2010

Question
Hi,

My husband and I purchased our first home about 18 months ago.  We are both in the process of changing jobs, which will allow us to move back to our home town in a different part of the state. We are excited to move back and have already started looking at properties of interest online.

Now that we have done this once before, we have a better idea of the kind of home we want and need.  We are thinking of starting a family, and more space is in order.  

Unfortunately, since we have had our current home for such a short time, we still owe about $90,000 on our mortgage here.  We would need another mortgage (possibly as much as $150,000) to secure the second home.

Ideally, we would like to move as soon as possible, and with as little financial detriment as possible.  Our job changes have resulted in extra money available, so we intend to save this extra money up and use it to our advantage.  

Given the current real estate climate, we know that it is unlikely that we would sell our home quickly, and for the amount needed to cover the mortgage.  We know that people move from one mortgage to another all the time, but we don't know how they do it.  We are afraid of strapping ourselves and defaulting on a mortgage by moving too quickly, but no matter how we slice it, it seems like we would have to own two homes at once in order to move.  These are some of the "solutions" offered to us by family and friends:

*Get into another home with a new mortgage and rent out the old home on a month-to-month basis to cover the old mortgage until the house is sold.

*Stay in the current home and throw every last penny into paying off the current mortgage.

*Stay in the current home and save up money until we have enough to pay both mortgages for a period of 2 years.  The "old" house should sell by then.

*Move as soon as possible and swing both mortgages.  Sure, it will be tight for a while, but you could luck out and sell the old home quickly.

*Use one of the realtors who promise "Your home sold in XXX days or I'LL BUY IT!"  That way you can move right away.

*Put your house up for sale while you still live there.  Once someone puts in a serious offer, you can start nailing down a new house.

Are any of these options worth looking into?  Have other homeowners tried any of these before?  Any other options or advice would be greatly appreciated.  

Answer
Dear Andrea;
First of all you should talk to a lender to see what you qualify for.  The market is still slow for selling a home and the market is still great for buying a home.  Interest rates are still historically low so if there is a way to buy right now and qualifying for a loan it is a great time to move.  You could possibly rent the existing home out for a while until the Seller's market turns around.  It is difficult for me to say which option will work best for you since I cannot see your finances.  You could talk to an accountant and find out what your tax advantages will be.  Also, talk to a local agent who knows the market in your area and can give you a better idea of how long it will take to sell your home.  Chances are you will not be able to see any financial gain from the sale in such a short time but certain areas are beginning to turn around now.  Perhaps you can wait for the Spring market and buy a home now with a delayed closing.

Best wishes,
Jessica Bryan