Getting Easy Home Loan Mortgages
Nine times out of ten, it makes far more sense to sell your current house before taking on a new mortgage and new debt. Selling home before buying does bring with it a few inconveniences, such as coordinating where you will stay between the time you sell your old home and close on your new one. Selling your own home first, however, also means you will have enough money to put a good down payment on your second mortgage, thus avoiding the expense of having to purchase mortgage insurance.
There are a few times, however, when you may want to consider buying before the sale of your hold home is completed.
You’ve Found the Perfect Home
If you think a home is perfect for you, chances are that other buyers will think it is perfect for them as well. In order not to lose the home of your dreams, you may need to proceed with making an offer and buying, even if your old home hasn’t sold yet. This is a risky financial move, because you may spend the next several months or years struggling under the debt of two mortgages.
You Need to Make a Short Sale
A short sale means you owe more on your home than the home itself is worth. This is sometimes referred to as being underwater with your mortgage. One way to deal with being underwater is to negotiate a short sale with your lender. This means you sell the property for whatever you can, pay the lender back as much as possible from the proceeds of the sale, and walk away. If you have to sell your first home under these conditions, there won’t be any money left over from the sale for down payment and closing costs anyway, so it doesn’t really matter when you take out your second mortgage.
You Intend to Default on Your Initial Mortgage
If you are planning to walk away from your initial mortgage, it’s imperative that you get a new mortgage before you actually stop making payments on your first home. Once you actually do default on the mortgage, your credit will be damaged and it will be at least three to five years before you will be eligible for a loan to purchase another home.
Selling Home is Difficult
Sometimes people simply must make a move for business or personal reasons, but they find that their old home is very slow to sell. If you’re in this position, you can either stay in an apartment and pay rent month to month until you are finally able to sell your old property, or you might consider taking out a “bridge loan” to cover the down payment and closing costs on a new home. You repay the bridge loan when your old property sells. The risk, of course, is that if the old property doesn’t sell, you are left responsible for two mortgage payments as well as payments on the bridge loan.
In general, you’re better covered financially if you sell your old home first and then use the proceeds to make a down payment and pay the closing costs on a new piece of property.
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