Expert: Dick Dennis - 6/27/2006

Question
I need to relocate for my job and sell my current home.  I owe approximately 42,000 on a 1st mortgage and 15,000 on a 2nd.  The most recent tax assessment is 58000.  What happens if I cannot sell my house for at least 57000?  I have checked and can probably get a mortgage for a new home with no money down IF I can break even on my house.  If I can't - does the 2nd mortgage become completely due or can I continue to pay it off monthly?  What collateral would support that 2nd mortgage if the original house were sold?  HELP!

Answer
You are responsible for the 1st AND 2nd mortgage, Melissa. The 1st and 2nd will become due and payable upon you NOT making their payments. So, when you sell your house, both mortgages must be paid off unless you can get the buyer to assume, or at least take title subject to, the existing mortgages.

The difference between "assume" and "taking title subject to" is that the buyer would be totally responsible for payment on the "assume." The buyer would not be responsible for the second choice. But then the existing lenders would have to approve the assumption and in most cases, the lenders may never know that someone else has taken over the second option.

If you break even on your house, then you have nothing to worry about because the buyer is going to get his/her own loan(s).

But, if you choose to rent your house out, then, yes, you would be responsible for the mortgage payments.

So, you can see you have a few options in this matter. Check and talk with your Realtor or a REAL ESTATE attorney.

I do wish you well.

Dick Dennis          dixiedee13@aol.com
www.OldProblemSolver.com