TKDmom Posted January 12, 2012 Share Posted January 12, 2012 DH and I are considering moving up to a bigger house. We built the house we are currently living in about 7 years ago. It has 3 bedrooms. The kids' bedrooms are small, and with 4 kids it'd be nice to have more space for them (we're also considering having more kids ;)). If we move we'd want to get a 5 br house. I need some help thinking through pros and cons of moving. I've never bought or sold a house before (building seems different enough from buying an existing house that I'm feeling a little intimidated). What are the factors I should be taking into consideration? What should I watch out for? I'm not even sure what questions we should be asking ourselves. My biggest objection to moving is financial. The housing market really stinks here. Our house is worth about 2/3 of what we owe on the mortgage. I don't like the idea of trying to do a short sale (and I don't know how our mortgage company would handle it either), nor do I want the added responsibility of renting out this house. The way interest rates and prices are right now, we could get a 5br house with a pool for less than we are paying on our current mortgage on our 3br non-pool house. But we'd have to sell this house somehow. DH likes the idea of moving to a fancy neighborhood that mows your lawn for you. I like the idea of moving to a slightly less fancy neighborhood that has big trees and room for a garden. We could hire someone to mow the lawn if it's really that important to him. ;) Either way it would be nice to move to a nicer neighborhood. We feel like the area where we live has been going downhill. The area where I really want to move would cut his commute in half, and allow him bike to work when the weather is nice. Our alternative to moving is to convert our playroom/office into a 4th bedroom. Technically we cannot call it a bedroom because we have a septic tank and we'd need a bigger tank for more than 3 bedrooms. It is not my ideal solution, but I think it's our only option is we don't move. I don't think we could stuff another bed/crib into our kids' rooms. We can't add on to our house either (even if we got a bigger septic tank). The exterior walls are concrete block with poured concrete reinforcement, so we're locked into the current footprint. Thoughts? Ideas? Quote Link to comment Share on other sites More sharing options...
Mrs Twain Posted January 12, 2012 Share Posted January 12, 2012 If I were you, I would convert the office into a fourth bedroom and make do for the time being. You need to try to pay down your mortgage, at least until you don't owe more than the house is worth. That would be the wise and honest way to deal with the situation. A short sale is when you tell the bank that you have a tragic circumstance which prevents you from paying back the money you borrowed. Things like a death in the family or a disability where one spouse can't work or things like that would qualify for the bank to consider giving you a short sale (i.e. forgiving what you can't pay back which you borrowed from them). The bank will need to see all of your assets and savings, and would demand that you pay them everything you can before they would consider approving a short sale. You should not do a short sale if you just want to get out of your house so that you can take out another mortgage for a nicer house. If you actually did a short sale, I think your credit would be ruined and you wouldn't be able to get another mortgage anyway. If I were you and really wanted to move, I would buckle down on my budget and put every dollar I could spare into paying down the mortgage. Once I could sell the house as a regular sale (i.e. pay off the mortgage that I owed), then I would consider moving to a different house. Keep in mind that there are a lot of expenses in selling a house and buying a house. This includes things such as realtor fees and all kinds of charges. It usually adds up to something like 3% of the cost of the house with buying and more for selling. You need to factor that in when you decide to move to make sure you have enough money to cover it. Quote Link to comment Share on other sites More sharing options...
Ottakee Posted January 12, 2012 Share Posted January 12, 2012 I agree with trying to pay down your current mortgage as much as possible. Otherwise you will be taking that debt and adding it to the cost of the new house which will mean a bigger payment. Bigger house and nicer areas tend to mean more taxes, possibly association fees, higher upkeep costs, higher utilities, etc. I would factor that all in carefully before moving. Quote Link to comment Share on other sites More sharing options...
TKDmom Posted January 12, 2012 Author Share Posted January 12, 2012 If I were you, I would convert the office into a fourth bedroom and make do for the time being. You need to try to pay down your mortgage, at least until you don't owe more than the house is worth. That would be the wise and honest way to deal with the situation. A short sale is when you tell the bank that you have a tragic circumstance which prevents you from paying back the money you borrowed. Things like a death in the family or a disability where one spouse can't work or things like that would qualify for the bank to consider giving you a short sale (i.e. forgiving what you can't pay back which you borrowed from them). The bank will need to see all of your assets and savings, and would demand that you pay them everything you can before they would consider approving a short sale. You should not do a short sale if you just want to get out of your house so that you can take out another mortgage for a nicer house. If you actually did a short sale, I think your credit would be ruined and you wouldn't be able to get another mortgage anyway. If I were you and really wanted to move, I would buckle down on my budget and put every dollar I could spare into paying down the mortgage. Once I could sell the house as a regular sale (i.e. pay off the mortgage that I owed), then I would consider moving to a different house. Keep in mind that there are a lot of expenses in selling a house and buying a house. This includes things such as realtor fees and all kinds of charges. It usually adds up to something like 3% of the cost of the house with buying and more for selling. You need to factor that in when you decide to move to make sure you have enough money to cover it. Thank you for explaining that. I have been unclear about what is involved in a short sale. We have been snowballing our debt payoffs, and the house is next on the list. We can get it paid down to below the home's value in maybe 3 years, which isn't really that long... Quote Link to comment Share on other sites More sharing options...
foxbridgeacademy Posted January 12, 2012 Share Posted January 12, 2012 I disagree somewhat with other posters. If you can get bigger house that will be worth more $$ in the future for the same $ as you're paying now? I say do it. I would suggest you try to rent your house either DIY or through a management company. With people going through their own foreclosures there's a good market for renters. Doing this will save you the moral questions and save your credit rating. Also when market picks back up you won't have lost all the time and $$ you put into the house. If you really can't see yourself as a landlord.... then I personally see no problem with the short sale. Quote Link to comment Share on other sites More sharing options...
Just Another Jen Posted January 12, 2012 Share Posted January 12, 2012 I just want to add our experience in that even if you sell your home for more than you owe the fees at closing add up. We had to take out a $20,000 loan to pay closing costs. So, we sold the house for more than our mortgage but, we are still paying for that house 3 years later. Quote Link to comment Share on other sites More sharing options...
StephanieZ Posted January 12, 2012 Share Posted January 12, 2012 I can't see how you are going to get rid of your current mortgage unless you have lots of cash in hand. Mortgage companies are not just going to give you the short sale difference unless you are essentially in foreclosure (at which point the difference they give you is actually taxable income to you, BTW), and in that case, your credit will be destroyed and you won't be getting a new mortgage on the house you want to buy. So, if you want to move, you need to come up with the cash to pay the difference between what you owe (plus the selling costs, usually around 7% of selling price) and what you can sell it for. Then, you go to the closing table WITH YOUR CASH IN HAND. So, you have to PAY the difference to get rid of the house. If you can't do that, then I can't see a way to get a bigger house. :( Oh, one more option could be that if you have great enough credit and/or cash in hand to finance the new house while still keeping & renting the old house, that is feasible, but financing will be much harder, and then you have the significant risks of renter issues. You might be stuck, for now, until you can pay down/save up to get rid of the old house. Sorry to be a downer! I hope you find a solution! Quote Link to comment Share on other sites More sharing options...
Ottakee Posted January 12, 2012 Share Posted January 12, 2012 But she would have the 1/3 of the old mortgage PLUS the cost of the new house so her new payment would be MORE--even if the new mortgage is the same amount of their current one. Plus the added upkeep, taxes, association fees, etc. might really add up. Quote Link to comment Share on other sites More sharing options...
TKDmom Posted January 12, 2012 Author Share Posted January 12, 2012 But she would have the 1/3 of the old mortgage PLUS the cost of the new house so her new payment would be MORE--even if the new mortgage is the same amount of their current one. Plus the added upkeep, taxes, association fees, etc. might really add up. Right. And though we could afford the extra payments, it just seems foolish. Dh and I keep having this back and forth. We would both like a new house, but I'm uncomfortable with the extra debt. I'd rather be doing something else with that money. But Dh is is pretty persuasive when he starts talking about the advantages of moving, and all the logic just flies out of my head. ;) Quote Link to comment Share on other sites More sharing options...
Moxie Posted January 12, 2012 Share Posted January 12, 2012 I think a short-sale is a bigger deal then you think it is. Doesn't it go on your credit as very close to a foreclosure? Plus, there is the moral issue of walking away from debt you signed that you would pay. Tough decision! Quote Link to comment Share on other sites More sharing options...
Brigitte Posted January 12, 2012 Share Posted January 12, 2012 I can't see how you are going to get rid of your current mortgage unless you have lots of cash in hand. Mortgage companies are not just going to give you the short sale difference unless you are essentially in foreclosure (at which point the difference they give you is actually taxable income to you, BTW), and in that case, your credit will be destroyed and you won't be getting a new mortgage on the house you want to buy. So, if you want to move, you need to come up with the cash to pay the difference between what you owe (plus the selling costs, usually around 7% of selling price) and what you can sell it for. Then, you go to the closing table WITH YOUR CASH IN HAND. So, you have to PAY the difference to get rid of the house. If you can't do that, then I can't see a way to get a bigger house. :( Oh, one more option could be that if you have great enough credit and/or cash in hand to finance the new house while still keeping & renting the old house, that is feasible, but financing will be much harder, and then you have the significant risks of renter issues. You might be stuck, for now, until you can pay down/save up to get rid of the old house. Sorry to be a downer! I hope you find a solution! :iagree: To do a short sale, you will ruin your credit and won't be buying for at least 3 years. So, you might as well stay where you are until the market improves and can sell for what you owe. Quote Link to comment Share on other sites More sharing options...
gingersmom Posted January 12, 2012 Share Posted January 12, 2012 Do it the old fashioned way. You sell your house first and then buy/rent a new house. Quote Link to comment Share on other sites More sharing options...
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