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Asked by Jonny, Chicago, IL Mon May 30, 2011

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Answers

17
Justin Ruzic…, Agent, Greenville, SC
Mon May 30, 2011
Jonny,

Your situation will be the problem for many sellers in today;s down market. You want to take advantage of the Low Interest Rates, Low Prices, but unfortunately you are also stuck with selling at the Low Prices. What are your options?
1. If your condo allows for rentals you could rent your unit out, the downfall, NONE, of the income you receive from your rent will be considered when you purchase a new property. Unless you have 2 years rental/property management history which is why the one lady suggested you rent your unit for 2 years and you rent somewhere for 2 years..
2. Do you have 20% downpayment for a new property or do you just have 5% saved? If you have 20% down, you could sacrifice your down payment money's when you sell your condo, and then get into an FHA mortgage where you penalize yourself because you don't have the 20% down so you are forced to pay high Mortgage Insurance, thus defeating the benefit of low interest rates.
3. If you have 20% down for a new property, could you refinance your condo at todays low interest rates you pay minimal fees with a good company for refinancing, if needed pay some moneys further down on your condo or more points to get into a really really low interest rate with the goal of reducing your monthly expense by more than $300/month, then rent out your unit for 3-6 months, save up money in the process, live at a friend or relatives home during that time, then, go back to the drawing board of purchasing your "Second home" which will become your primary residence. The key here is your current income will have to cover both mortgages, even though you are receiving income from the condo. If your income can do that, and you have 15-20% saved for down payment you are in a great position to own two properties one generating income the other used as a roof for yourself.

Unfortunately if you can't figure out a way to support both properties with your current income your situation is a tough one.
ps. here is an interesting blog i wrote in 2009 about real estate prices which is coming true these days.
http://blog.house-guy.com/2011/05/follow-up-on-2009-real-est…

Thank you.
If you need a knowledgeable mortgage broker to work with in Chicago, let me know I am from the suburbs or chicago and still keep in touch with a lot of quality people in the industry up there.
Web Reference:  http://blog.house-guy.com
1 vote
Evelyn S. Fr…, Agent, Chicago, IL
Mon May 30, 2011
Hi Johnny,

Work with a Realtor to help you determine the fair market value of your condo, that's at no charge. Interview a few (2-3) agents. Start with the ones that responded to your question right here on Trulia, myself included. Based on that information you can now determine which is the best plan of attack for you.

If your condo's fair market value is below the amount due, my suggestion would be to rent it out. Your Realtor can help you determine the marketable rental value also.

Once you have that sorted out you can now determine if now is the right time for you to buy another property (as a side note, buying now is the best time to buy due to high inventory, low prices & low interest rates, but maybe not the best time for you). Keep in mind that if you do keep your condo in order to purchase a 2nd home you may be required to come up with a higher down payment, 25%.

Feel free to contact me directly if you want to go over your options in more detail or if you'd like a free comparative market analysis of your home.

Good luck!
1 vote
Nick Pirro, Agent, Chicago, IL
Mon May 30, 2011
Unfortunately your options are kind of limited. You may pay the difference to your bank or got the short sale route.You cannot the roll negative equity into a new property, like you can when you buy a car. Short sales are a long and tedious process and it will negatively affect your credit score, so I would only do a short sale if I had no other option.
1 vote
David Cooper, Agent, Los Angeles, CA
Thu Jun 9, 2011
How is your credit and FICO score?. If you are currently making your condo payments, you are not "hardship: for a short sale, and you are in the same position as almost 40% of all underwater homeowners. I hope you live in a nice area.

DAVID COOPER Las Vegas Foreclosure and Bank Owned REO specialist with 35 years experience. For your freee list Call +1-7024997037 or check website
0 votes
NonRealtor, , 23456
Thu Jun 9, 2011
Hi Johnny,
It may be best to keep the Condo until it's paid off. Then you should be able to rent it out and buy a house. Good Luck
0 votes
Jason Solarz, , Rolling Meadows, IL
Fri Jun 3, 2011
I also work for a mortgage lender like Aimee and she is right on. If you went the short sale route you wouldn't be able to buy for 2 (if you have 20% down payment) or 3 years. In addition, you will have to justify to the lender that you won't be bailing on your current mortgage. Guidelines are much more strict than they used to be. If you do decide to rent your place out, unforunately, your debt to income ratio will include both mortgage payments, even if you are renting it out. If you are unfamiliar with debt to income ratio, basically its the amount that you have to pay each month (as shown on your credit report) divided by the total amount you make each month (pre tax). Different lenders have different guidelines but just to give you an example for an fha loan we would need you to be under 57%. If you make enough to qualify this way, or have someone that would be willing to be a co-borrower that might be an option.
Please email me at jsolarz@ephmc.com or call me at 847-797-9500 ext 8264 if you would like to discuss this further. Good Luck!
0 votes
Aimee Renkes, , Chicago, IL
Wed Jun 1, 2011
Most responders are correct and you are definitely caught between a rock and a hard place. You will not be able to add the difference to a new mortgage. Come with cash to pay the difference or pursue a short sale.

To be clear, if you do go the short sale route be prepared to wait at least 2 years from thedate the short sale closes before you can buy again. Fannie Mae loans allow you to buy after 2 years with 20% downpayment or after 4 years with 10% down or 7 years with less than 10% down. Freddie Mac allows you to buy only after 4 years from completion of short sale. FHA 3.5% downpayment will allow you to buy after 3 years.

So go in to this with eyes wide open. And if you do decide to rent your condo and rent a place to live, make sure to save every penny and take as few deductions on your income taxes as possible because you most likely will need to maximize the rental income to qualify for a new purchase.

Sorry to be another bad news bear, but I wish you the best of luck as you weigh these heavy options and ideally identify true professionals who are knowledgeable to help you navigate the hurdles in place.
0 votes
Joe Schiller, Agent, Chicago, IL
Tue May 31, 2011
welcome to the real state of the economy..the papers are full of 1% this and 2% that.. the mortgage crisis and loss in equity is about 30% and will be 40% by the end of the year. 10 years of appreciation and 10 years of mortgage payments are out the window. - rent your place, go rent another place and let it alone for a while. If you lost say 50K on your place its better to rent and loose 500 a month for 5 years and see what happens..
Web Reference:  http://www.joeschiller.net
0 votes
Joe Schiller, Agent, Chicago, IL
Tue May 31, 2011
welcome to the real state of the economy..the papers are full of 1% this and 2% that.. the mortgage crisis and loss in equity is about 30% and will be 40% by the end of the year. 10 years of appreciation and 10 years of mortgage payments are out the window. - rent your place, go rent another place and let it alone for a while. If you lost say 50K on your place its better to rent and loose 500 a month for 5 years and see what happens..
Web Reference:  http://www.joeschiller.net
0 votes
Terry Perdue, Agent, Chicago, IL
Tue May 31, 2011
I would suggest you ask a lender. I seriously doubt if any lender would do this. What normally happens is that should your condo sell for less than what you owe, you need to bring funds to the closing to cover the shortage.
0 votes
Harry Kunelis, Agent, Chicago, IL
Tue May 31, 2011
greetings,

Both Matt and Tony below make very good point. on the surface, it appears that you can benefit on one end by a short sale, only to then preclude yourself from buying for a couple years; unless you work with an investor who handles both short sales and creative real estate scenarios. you can click the web reference link to sign in.

kind regards,
harry (investor/agent)
(312) 339-6758
Web Reference:  http://www.3stepvictory.com/
0 votes
Matt Laricy, Agent, Chicago, IL
Tue May 31, 2011
Well your only real options would be 2. You could take the loss, and come out of pocket to closing. If you cant afford to do that, you could short sell your condo. However, you wouldnt be able to buy right away, and you would have to be able to explain your short sale through a hardship letter, and qualify for it. Your best bet would be to come out of pocket. If you cant afford to do so, as most people cant, you just have to hold out. i know its a terrible thing, but it may be your only option.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696
Web Reference:  http://AmericorpRe.com
0 votes
Tony Guisto, Agent, mokenA, IL
Mon May 30, 2011
Hi Johnny,

You may want to speak to a real estate investor like myself, who through some creative financing may be able to offer or do a few different scenarios depending on your situation and what you are looking for. If you would like please feel free to contact me either by phone (708-942-7039) or e-mail (redhotrei@hotmail.com). Hope you have the best results in whatever option that you choose to do.

Tony
0 votes
Lynn Pufpaf, Agent, Chicago, IL
Mon May 30, 2011
Find out if you are able to rent your condo. Then consider renting a house for 2 years & your condo. Then you will be able to use rental income from the condo (need 2 yrs landord experience) as income toward affording your new home. Sounds complicated, but otherwise stay put & pay it down!
Call with questions 773-339-3367
0 votes
David Burnham, , Washington, DC
Mon May 30, 2011
Your best option will be to use your savings to pay off the difference when you go to sell your home. Then, if you don't have enough for a large downpayment on our next home, then you will want to look at FHA options for low down payments.
0 votes
Jack Lewitz, Agent, Lincolnwood, IL
Mon May 30, 2011
A short sale is not an option if you want to buy a house. Does your condo association allow rentals? If so rent your condo to cover the mortgage and then buy a home. If your not able to rent then you might be stuck living in the condo until priced go up.
0 votes
Susan Nice, Agent, Chicago, IL
Mon May 30, 2011
Hi Jonny,

Unfortunately that is not an option....the lien is tied to the current property and needs to be paid in full in order to deliver clear title to the next owner. However, depending upon your situation, you could possibly try a short-sale.

I'd be happy to talk to you more about your options if you aren't already working with a real estate agent.

Contact me at 773-822-2131 or since@dreamtown.com
Web Reference:  http://www.susannice.com
0 votes
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