Lynn, Home Owner in Quintero, Peoria, AZ

How do I buy another home when I am upside down by 20K in current home. We need more space and would like to be able to take advantage of now prices

Asked by Lynn, Quintero, Peoria, AZ Fri Apr 15, 2011

I was told we would need 1 year rental history in order to buy another home. We can surely get a rental amount to cover the mortgage amount. Would the 2nd home have to have a conventional loan? Everyones advice is just to let it get foreclosed and re-buy in 2 years. I do not really want to do that. What are my options.

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So your current home is worth $20K less than you loan balance. As long as you have 20% ready for a down payment on the second home, a signed lease for your current home (lenders will usually discount your rental income by 25%), and the income to qualify for the 2 mortgages & property taxes, you should be able to make a purchase.

Oggi Kashi
Paragon Real Estate Group
CA DRE 01844627
Web Reference: http://www.oggikashi.com/
0 votes Thank Flag Link Fri Apr 15, 2011
You did not mention also the issues of where you currently live. If you are currently living in Quintero it may be difficult to get a renter due to location. Most of my buyers who need more space are able to buy with qualifing for both properties. Really the it is best to contact a good lender find out your financing options. Whomever told you to foreclose and you would be able to rebuy in 2 years in opinion is not correct. Usually after a foreclose on your credit it is 7 years. Yet again contact reputable lender. Suggest you contact a lawyer also to discuss options on foreclosure or short sale.
0 votes Thank Flag Link Fri Apr 15, 2011
The other answers are good ones, but we just didn't have enough information about your situation.

Foreclosure should always be your last resort.

If you can take the 20k hit on your house when you sell and still have enough to make a down payment on a larger home, do that. If you can make the payments, you might have to stay in the smaller house until you have the savings to do that. Put yourself on a very strict budget and make it work!

If you can't make your current payments, show your lender your hardship and expenses and see if they will let you do a short sale. You would still have to rent, but a short sale is better than a foreclosure.

Good luck!
0 votes Thank Flag Link Fri Apr 15, 2011
Hi Lynn,
You do not mention your cash situation.
If you can sell your house, make up the difference out of savings, and still have a down payment for your next house, you do not have an issue.
We are so used to people not having savings or income that most answers conclude you have to short sell your house, or let it go to foreclosure.
Phil
0 votes Thank Flag Link Fri Apr 15, 2011
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