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  1. #1
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    Real Estate Question

    Like many others, I'm upside down on my mortgage. For me to sell right now, I would probably have to bring about $25k to 30k to closing.
    I know this is a bad time to sell, but it is a fantastic time to buy. There are houses selling at auction up here for a fraction of the normal cost.
    So here is my question; If I were to buy a house for $100k, would I be able to take out a $130k mortgage to cover the loss on my current house? For argument's sake, we can say that the house would appraise for $150k. So that would not be an issue.



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    Re: Real Estate Question

    I am a realtor. I dont know any bank right now that will loan you more than what the market value of the house is. Those days are over. So even if you bought it at 100K, and it was appraised for 150K. They are only going to loan $ you based on the sales price, not the appraisal. They have to cover their but in case you default. Lets say you default in a year and the house sells for 105K and you your lien is 149K. The bank is going to have to eat the 44K difference. Good luck. Things are definitely picking up, especially down here in KC.



  3. #3
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    Re: Real Estate Question

    Thanks for the insight.
    Would you be able to get a second mortgage up to 90% of the appraised price?



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    Re: Real Estate Question

    That's the kind of thinking that got the lenders in trouble in the first place. You can't speculate on what the house "should" be worth. It's worth what the market is telling you it's worth today and I'm sure that's all a lender will give you.



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    Re: Real Estate Question

    Quote Originally Posted by Bobber View Post
    That's the kind of thinking that got the lenders in trouble in the first place. You can't speculate on what the house "should" be worth. It's worth what the market is telling you it's worth today and I'm sure that's all a lender will give you.

    Good point.



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    Re: Real Estate Question

    Cyflier is correct. On a purchase, you get a mortgage for the purchase price or the appraisal value, which ever is lower.

    MN clone - I run a small real estate services firm here in the Twin Cities. I am a licensed agent, appraiser, and loan officer. If you want any information, send me a private message and I'll get you my contact info. No obligation...would be more than happy to talk to you and see if you have any options at that point.



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    Re: Real Estate Question

    Quote Originally Posted by MNclone View Post
    Like many others, I'm upside down on my mortgage. For me to sell right now, I would probably have to bring about $25k to 30k to closing.
    I know this is a bad time to sell, but it is a fantastic time to buy. There are houses selling at auction up here for a fraction of the normal cost.
    So here is my question; If I were to buy a house for $100k, would I be able to take out a $130k mortgage to cover the loss on my current house? For argument's sake, we can say that the house would appraise for $150k. So that would not be an issue.

    I guess I don't understand why you would sell right now if you don't have to? Yes, house prices are low but like you said, you're not going to get good money on the house you sell.



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    Re: Real Estate Question

    I can't speak for MN but down here in Des Moines a lot of the banks aren't nearly as willing to deal on foreclosures because the government is going to start buying all the acid mortgages out there in a couple of months. So if the bank carries it for a little longer they will get full price back for the defaulted loan. That is just what I have run into with a couple of clients that were trying to find a deal. Most of the deals are already gone down here. It is probably different up there with much more inventory.



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    Re: Real Estate Question

    Have you thought about renting your current house? We are in that situation right now and it is working for us. Ask your Realtor, they might be willing/able to help you with it.



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    Re: Real Estate Question

    You... um, didn't learn your lesson the first time?

    So, you're upside down in your current house, and you want to get upside downerer in you next?

    Dude... step away from the glue.

    BTW - there are risks inherent in the rental thing. Be very careful.

    Man, I hate the bailout to death. See the comments above about banks not willing to deal. To heck with that capitalism, thing.


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    Re: Real Estate Question

    Quote Originally Posted by Phaedrus View Post
    You... um, didn't learn your lesson the first time?

    So, you're upside down in your current house, and you want to get upside downerer in you next?

    Dude... step away from the glue.

    BTW - there are risks inherent in the rental thing. Be very careful.

    Man, I hate the bailout to death. See the comments above about banks not willing to deal. To heck with that capitalism, thing.
    I'm thinking that the bailout will include personal job counseling from the President. I've got a job I'm curious about, so I figure that I'll send him an e-mail and get his opinion. Probably should have done it sooner.


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  12. #12
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    Re: Real Estate Question

    Quote Originally Posted by Phaedrus View Post
    You... um, didn't learn your lesson the first time?

    So, you're upside down in your current house, and you want to get upside downerer in you next?

    Dude... step away from the glue.
    Well, the thing is, I didn't do anything wrong the first time. It seemed to be a good deal when I got it. We bought it from a realtor, who purchased six months earlier. We paid 5% less than he did, after he dropped a couple thousand in improvements. (windows, fixtures, etc.)
    I guess I don't see why it would be a poor move to get out of this house and into a larger one for a lower cost.



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    Re: Real Estate Question

    Up until the economy went south banks were loaning up to 100% of the value of the house and they had an asset that was worth 100% and would gain value as time passed on.

    Now the banks have loan obligations of up to 100% of what a house used to be worth but is now worth 25% to 70% of what it was worth, depending on what part of the US you are in, when the loan was done initially. That is not a good position to be in when you are a bank and have to have a certain amount of liquid capital over and above the loan obligations they have out there. And your asking if they are going to loan you 130,000 for a house that is only worth 100,000 (it is what you paid for it so what they will loan)

    So I would say if you sold your house and had to bring $25,000 to the close, then you can plan on getting no more then 95% (if you go FMHA) Loan to value for your new house. So unless you have an extra $30-40,000 to get that good deal, I would stay where I was at.



  14. #14
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    Re: Real Estate Question

    Quote Originally Posted by MNclone View Post
    Well, the thing is, I didn't do anything wrong the first time. It seemed to be a good deal when I got it. We bought it from a realtor, who purchased six months earlier. We paid 5% less than he did, after he dropped a couple thousand in improvements. (windows, fixtures, etc.)
    I guess I don't see why it would be a poor move to get out of this house and into a larger one for a lower cost.
    You're trying to borrow 130% value. That means you're "betting" that the house is whatever percentage that is undervalue, in order to get un-upside down.

    Seriously. Thinking like that is why we're in the situation we are now. You don't even know what you don't know.


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    Re: Real Estate Question

    Quote Originally Posted by MNclone View Post
    I guess I don't see why it would be a poor move to get out of this house and into a larger one for a lower cost.
    It would be a good move if you have the money to do it. But it sounds like you don't. Phaedrus is right -- step away from the glue. Or in more clear words, live in a house you can afford.


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