Avoid Holding Two Mortgages


Sell One House before Buying Another

In a time of economic uncertainty, one of the most frustrating things for many potential homebuyers is the lack of activity in the market. They are eager, in some cases desperate to buy into a new home – perhaps for a necessary work move or to try and area with lower costs of living, but they are stuck. Most families can’t afford two mortgages. This means you’re going to be stuck with one house until you manage to sell it. You simply can’t buy another one until you’re freed from your mortgage commitment.

Walking Away

One sad turn of events in the poor housing market is an increase of families simply walking away from homes. While a danger to your credit and perhaps in a court if you’re not protected by your state in a foreclosure, walking away from a home is only possible if you have somewhere else to live that doesn’t require a new mortgage. You can’t buy a new home if you’ve allowed another one to default. This may be an option for desperate individuals looking to rent for the next ten years or so, but not a realistic solution for those feeling trapped in an old home with eyes on immediate new homeownership.

Renting

In order to make your current home more desirable, you often need to do some quick-fixes and use new items and upgrades to really make it shine. This is far easier if you’re not living in the home soiling the brand new carpet, for example. To get out of the house and free up the space to attract a buyer you need somewhere to go while you fix things up and wait for the buyer. It’s hard to commit to a new lease on a rental home because you’re carrying that lease in addition to a mortgage – it’s no better off than you would be with two mortgages.

You might downsize for the time being and get a lease on an apartment with a much lower rent. This works for many families – it’s the best possible scenario budget-wise outside of living with family members without any rent at all. The trouble with a low-rent solution is that the rent comes with a lease, and the lease generally lasts six months to a year. What if you sell your home in a month? Your improvements should make it more desirable and will ideally help it sell faster. You certainly don’t want to sell and be ready to move two months into a twelve month lease.

Check the terms of the lease carefully. In some cases you can break your new lease for a fee that’s reasonable in the grand scheme of things. Check the fine print carefully, however. You don’t want to be chased or even sued for the remainder of the rent if you break a lease. That can ding your credit as well.

Short-term Rentals

A solution that fits nicely into the middle is the short-term, furnished rental. If committing for a year to a new apartment isn’t in the cards, but you want out of your current home to help it sell more quickly, a short-term lease or even a month-to-month lease in a short-term rental is a great alternative. The rents are slightly higher, but you have the flexibility to walk away at any time when your home sells.

You can even pack up all of your furniture ahead of time and leave it in storage until you’re ready to move into the new home. A furnished short-term rental will have everything you need for a month or two while you wait it out for far less than you’d be paying if you picked up that second mortgage or even rented a comparable home.

Rebecca Garland is a professional freelance writer working hard to populate the internet with meaningful, interesting content. With advanced degrees in information science and business, Rebecca enjoys a variety of topics ranging from the entrepreneurship to New York corporate housing. Learn more about Rebecca on her professional website, www.internetauthor.net.

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