Yes and no. There are ways to combine both mortgages into one if your home's value supports that. However, once you sell the home, both mortgagees will want to be paid off. Meet with a realtor, in person, to get a professional opinion. Then meet with a mortgage lender. Find out exactly how far over your head you're in. Then go to a financial planner and develop a plan that will decrease your debt. I would be happy to recommend any or all of the above. Please do this soon. too many people wait until they have no options left except losing their home and their credit rating. Take action immediately.

Tue May 13 2008, 18:41

Cody -
You didn't talk about when you did these mortgages. Would refinancing help you? Talk with a mortgage consultant to see if there are other options for you. Currently I don't know of any program that would allow you to carry the mortgage from one property to another (if that is the question you were asking) so selling and buying a lower priced home would not help if you don't have the money to come to the table and pay what you owe at closing. Keith also pointed out a few other things that might apply like the tax implications, commissions and closing costs.

This is the time to talk with professionals in your area (mortgage, financial planning, etc.) and see what your options are but it doesn't look like selling would be in your best interest at this time.
Good luck and wish I had a different answer for you.
Trisha Lee

Mon May 12 2008, 16:14

Cody, you have a great recommendation in David Ramsey's book (and the rest of her post, BTW).

I agree that you need to sort out your priorities and your problems.
The best way to reduce debt is to cut your expenses, Refinancing a first mortgage and perhaps a Home Equity Line of Credit ((HELOC) that is an adjustable rate), might be the way to go. However, lenders have tightened their standards, so it may be that refinancing is not a viable option.

The best advice I can provide is for you to talk with a couple of knowledgeable mortgage consultants and have them make suggestions. I would also consult with my CPA. There are tax implications that could affect your decision.

The other this to consider is the cost of selling your home. You will pay sales commiissions and other closing costs. Have a Realtor provide you with some assistance running some hypothetical numbers and see how you end up.
A typical example would be that if you have owned your home for a few years, you may have acquired some equity due to property appreciation. However, the equity is not "spendable". Most lenders use 20% loan to value, meaning that if your home was worth $400,000, you purchased it for $250,000, obtained a HELOC for $50K for the addition you built for your home.

Now, the other issue is if you added living area to your home (say added a bedroom and a bath, about 500 square feet), let's say you paid $100 per square foot to build it. Let's say that your home is now 2,000 square feet. Let's also say that homes in your area sell for $200 a square foot, so one like yours might sell fo $400,000

Your first mortage was an 80% loan (80% of $250,000 is $200,000), so your first mortgage balance is around $200,000. Then you took out the $50K loan for the addition, so your total loans are $250,000.
The home increased in value because of appreciation, and the additional square footage, and is worth $400K. But you cannot spend the $150,000.

What are your options?
1. You could sell. However you'd have to live somewhere. You'd have the net proceeds from the sale, but then you've got to buy another home, pay to move, would you buy a smaller home?
2. You could stay, get a second job, try to refinance...but you'd have to qualify.

This is a complex situation, so you should investigate your options and make a wise choice.

Fri Nov 30 2007, 20:49

Cody:

Normally no is the answer to your question about programs that would help you carry a 2nd mortgage over to a new home.

Here in Southern California there are a few builders that are doing the following:
1. Buying your current home for more than it is worth, paying off all of the mortgage debt.
2. The negative amount is then placed on your new purchase and amortized over the term of the new loan.
3. 90/10 loans are being offered for this deal (100% financing)

Therefore, you might find a builder in your area that would do this. However, I do caution you that you might get a new home but your debt, being re-allocated, will be more after the deal is done even if not more per month.

Fri Nov 30 2007, 07:44

I highly suggest you read the book Total Money Makeover by Dave Ramsey. This will give you some good direction in your desire to reduce your debt.

You need to speak one on one to a real estate agent in your area. There is no cost to you to talk with an agent who can tell you what the house will likely sell for in this market. If you've done some improvements to the house, your home is probably worth more than you paid. Get a bottom line number. If you sell your house and the proceeds aren't enough to cover both loans, you have to bring cash to the closing table to pay them off.

If you don't have the cash, are you better off concentrating all your extra income to the second loan while making minimum payments to everything else? If you did that how quickly could you pay off that second mortgage and then sell your home?

You could also refinance so that you would have just one loan, but that doesn't reduce what you actually owe on the house.

So my final answer is, talk to a real estate agent in your area and then talk to a lender and see what they say. Give them the actual numbers and they can you some very specific steps to take.

Fri Nov 30 2007, 06:46