Buying a bigger home - existing mortgage?

**mdhomebuyer** · 02-21-2009, 06:22 PM

My wife and I are looking to upgrade to a larger home soon, which would also make her commute better. Before we got married we each owned our own homes. We sold her townhouse for a profit recently, and now we are currently living in my single family home. Due to the current market, we will not be able to sell our house for the total amount still due on the mortgage. This really is the only thing that is keeping us "on the fence" right now.

Financially we are in a good position - good credit, stable jobs, and enough in savings to put a down payment on a new house. All things considered, we should have no trouble getting a loan for a new house.

If we decide to buy we can afford to carry both to mortgages, but obviously we would want to avoid this. We would also like to avoid taking a loss on the sale of our current home, so we have considered the possibility of renting it out. The only problem is that we will probably not be able to rent it for the amount that is due each month, so we would still be taking a small loss month to month - at least until we decide to sell.

Is there any way to work with a lender in this situation? Would a lender be willing to refinance our current mortgage? It would seem like it would be smart for our current lender to work with us in this situation, since they would be making more money if we were to buy a more expensive house now. We do not NEED to move right now, so if we have no incentive, we could always just stay put.

I'm sure our situation can't be a unique one - what do people typically do in this situation?

**agentsranking** · 02-23-2009, 12:47 PM

Your situation is very typical. If you have only one mortgage on the property it should be pretty easy to walk away from the situation using a short sale. Find a good realtor in your area that has experience negotiating with the banks. Most banks will accept a short sale even if you are current on your payments. This will allow you to preserve your credit.

**mdhomebuyer** · 02-23-2009, 04:20 PM

I always thought that in order to do a "short sale" the seller had to be in financial distress?

Are lenders willing to do short sales for situations like this?

We certainly don't want to do anything that is going to negatively affect our credit.