WWYD?

Story: I want to move into a bigger home. Our house is small and a starter.

We purcvhased our home @ the height of the market. Renovated it etc. Put good $ into it.

House is now worth LESS than we owe on the mortgage. On top of that, we add 5% RE commission- .....at the end of the day, we would have to pay out roughly $40,000-50,000k to sell the place and get out.

also to note- our mortgage is adjustable- adjusting every year..... so to refinance and rent the place... we would have to also put money in to bring the equity up to 20%...approx 80k

would you:



get the mortgage locked in, pay out the 80k and rent the house, knowing that the rent will be $500 a month lower than the mortgage payment?
or
would you sell now, cut losses and move on knowing the interest rates are good and house prices are low?
or
or would you stay in the house, watch the mortgage rates and keep saving?

ETA: we have enough saved to cover the 40-50k and also put 20% down on a home in the range we are looking at

Message edited 3/21/2011 4:00:10 PM.

Re: WWYD?

i would sell! if you have enough to cover the loss plus put 20% on a home, go for it!
you can lock in on this amazing rate and buy a larger house at a much lower price.
if i could afford the loss, i would do it..
the main thing is thatyou have the 20% to put down...

good luck!

Re: WWYD?

I'm sort of in the same boat...but I don't have the 40-50K to put into the closing to walk away and lose. I also don't have 20% down for something new...but I would even consider renting for a while to save. Unfortunately...I can afford to keep my house, but I can't afford to sell it

What are your reasons for wanting to move to a bigger place? Need more space? Kids? If you can afford to lose the 40-50K and really want to make the move now...I would do it. Good luck

Re: WWYD?

I would sell. As the previous poster said, if you are looking to buy a bigger house, you will be financially better off in the long run. You are going to "sell low" but also "buy low," and buy more, so you will be getting more for your money (and taking advantage of lower interest rates).

Also -

Renting can be a huge hassle. Even if you have good tenants, there is a lot of wear and tear on the house, so it will not be in the condition it is in now if you want to sell down the road. Plus, as the landlord, you will have to continue to sink money into the property (to make repairs and updates, plus pay taxes), and deal with all of the other headaches that come along (complaints from neighbors, etc.)

The market is not going to come back that quickly, and when it does come back, it will be gradually and the prices that were seen at the height of the market a few years ago will likely not be seen again. So if you can sell now, I would!

Let me know if I can help, or if you want a free comparative market analysis on your home. I am an attorney, so I have a unique skill set among realtors and have a lot of innovative marketing tools and techniques.

Good luck!

Re: WWYD?

I would sell! You can probably negotiate 4% commission especially if you agree to work with your listing agent as a buyers agent when buying!

Message edited 3/21/2011 10:41:57 PM.

Re: WWYD?

we were in the same exact situation. We had to bring about $50k to the table at closing because of the loss we took on our apartment, which was a lot. However, on the other end-- we got more house for our money and took advantage of low rates for mortgage.

I looked at it as adding more to the down payment on my house, ya know? Percentage wise, you get more house than you lose.

I have friends who are selling their apts where we were living, and they seemed to be priced higher-- so, prices are coming up-- but, on the flip side of things-- what you buy is also more expensive. We didn't want to rent or hold onto our apartment because we were afraid to lose even more money on it.

Re: WWYD?

I would sell.

You are not really losing if you sell low because you will also be buying low.

Re: WWYD?

I would sell.

Any way you look at it, it'll all level out..

If you sell now, cut your losses and get into something that'll be priced right and make it your dream home..

if you hold onto it, you have to dump money (to refi/lock %) on something you don't want to be living in..

Just move on!

I wish you all the very best!

Re: WWYD?

wow guys ...that really helps me.... on the decision process.

thanks for your imput.

i think we are going to put the house for sale.




i really appreciate the responses!!!

Message edited 3/22/2011 9:47:50 AM.

Re: WWYD?

$50k is a lot to just give away.

For me it would depend if you feel you are getting that much or more savings on the next house.

Good luck!

Re: WWYD?

Re: WWYD?

Re: WWYD?

I might think about renting it out.....if you rent it at a loss you can get tax benefits. and it sounds like you can afford to upgrade with the $$ you have now.

when the market turns around and you don't want to be a landlord anymore, then sell it.

Re: WWYD?

Re: WWYD?

Re: WWYD?

We are in a similar situation but I'm not looking to sell or move. We do not have much equity in our house because we did a big reno and took out a HELOC. We also have an adjustable rate mortgage (which has really worked to our advantage the last 3 years!)

I would vote to stay where you are, watch the rates but in the meantime try to pay down as much of the mortgage as you can or stash away savings to put towards your next home. We have been putting all our spare cash towards our principle and HELOC and that also helps our adjustable rate each year.