Expert: Dick Dennis - 8/7/2010

Question
Heres my situation. My home is worth about $169,000. I owe $110,000 on the mortgage, and another $30,000 on the second mortgage from a home equity loan. I make my house payments on time as well as the second. However all I can do is pay on the interest on the second. Putting them together, theres not much equity in the house. I have tried to refinance but Im told its not really feasible for me. So this is what Iam considering. Why not sell the house, get a few bucks out of it that Id make on it and just buy another. This way Im out of the second loan and start off with a low interest rate. That 30k is going to hound me and I think this is the only way out. Any ideas?  

Answer
It's good that you have been making your payments on time, Ronn. As long as you have the funds to buy another home, your credit should be in good condition to indeed buy another.

However, I would recommend you become a tire-kicker and see what kind of houses are available to what you can afford. You just might decide to stay where you are. You are in a unique position. Not that many homeowners are in positive territory with their loan/equity. And you might discover that your present house is a better deal than any you might encounter.

On the other hand, if you do see where you would get a better deal with another house, I would indeed change residences. However, be aware that your present house might be less valued than you think.

Get yourself a real good Realtor who is willing to work with you even though there is the possibility that you may stay where you are. In my opinion, a good Realtor will be satisfied with you staying where you are even though he/she may not earn a commission. But be fair with that person. Don't be tantalized by another Realtor. Consider that agent as YOUR agent and rely on that person for everything real estate. I do wish you well.

Dick Dennis
CA Real Estate Broker
Lic. #00349415
dixiedee13@aol.com