When the condo goes on the market we make it a contingency sale, as in it is contingent on you buying a new home. Although many potentiial buyers may be discouraged by your contingency sale and they will keep looking for something they wont have to wait for.
Another way is to sell the condo with a condition that you can rent your condo back from the new buyer for some tiime until you find your new home and close escrow.
Bottom line, get the condo on the market, Its red hot right now with the low rates and buyers are snatching them up in a frenzy.
Direct Anytime 510-604-1112
Allaince Bay Realty
CA DRE 01867111
#1 - you can sell the home and THEN buy the new home. If you sell the home, and you currently owe more than what you would "net" from the transaction, then you will either need to (A) bring in that difference with your own funds or (B) do a "short sale" which will negatively impact your credit as well as potentially prevent you from buying another home using a mortgage for at least 2-3 years (1-day is permissible if you are using VA financing OR with FHA financing if you were not late on the mortgage/other debts for the 12 months prior to the short sale AND are not purchasing a similar or superior home in the same commuting area).*
#2 - you could purchase the home and THEN sell your current home. This would require you to be able to qualify for both mortgages. Since you said you can't afford to pay 2 mortgages, I am unsure if this would be a real option for you.
#3 - you could rent out your condo and buy a new home. This would also require you to be able to qualify for both mortgages. Although, you may be able to rent your condo out simultaneously to help you qualify, but you could only use that rental income if you have sufficient equity in your condo (at least 25% equity is needed, potentially 30%). You should also have a strong desire to be a landlord.
As far as credit score, ideally a 740 will get you the "best" interest rates, although quite a bit lower, down to a 620 score, can qualify with many lenders, and even quite a bit lower than that with a few lenders. Scores are important, but any delinquent marks on your credit can be just as important - including if you do a short sale - as there are certain guidelines depending on the loan program & the details of the delinquency.
* If you do have a short sale, and you don't fit the "1 day" guideline or you aren't short selling because of an extenuating circumstance (job loss, medical, death of a wage earner, etc.), then you will be looking at 2 years with a 20% down payment.
It certainly doesn't hurt to start the new search, and put the condo on the market. The best starting point is to see what the value of the condo actually is and whether it will payoff the mortgage. Contact a local agent to have a market analysis performed.
Returning to the bank suggests deed in lieu of foreclosure which is akin to foreclosure. If you do that, then you may not qualify to buy another property.
You may want to sell your property first, and still look around to see what's available. You can always try to write an offer on another house, contingent on your selling your condo first.
If you're "underwater" on your condo, you may want to consider a short sale. Although the effect on your credit score is about the same as a foreclosure, the time it will take for you to qualify to buy another house is a lot shorter when you do a short sale than if you foreclose (which may take 7 years or so for you to again qualify).
Quite a few options. Tawagan po ninyo ako para maipaliwanag ko sa inyo.
Take care and good luck
(The above stats were taken from FICOâ€™s Banking Analytics Blog.)
If you are not short selling I would definitely sell, then start looking. Have a realtor such as myself set you up on a listing alert that will email you when homes in the area and specifications become available.
Please call me with any questions. Do your homework before making any decisions.
Either way, a conversation with a lender of your financial options are paramount in this situation even considering your money coming from a 401K
Either way you can feel free to call me anytime for a honest and straight forward discussion of ALL of your options
Dave Kelly - Realtor Â®
I always advise my clients to sell first. That puts you in a much stronger position when you start your search. You can offer to rent back your Condo while you search or stay with family and friends. Getting an offer accepting while needing to sell your home will make sellers uncomfortable and they won't want to wait.
I hope this helps!