Q: I bought a condo in 2006 and my mortgage is more than it should be. I recently married and would like to move into a more spacious house.
However, it would be difficult to sell my condo or even rent it for what we pay each month. My mortgage lender doesn’t do refi’s. So how can I move without defaulting on my mortgage?
A: It sounds like you have little or no equity in your house. I’m guessing that’s the case based on a number of things.
You bought your house in 2006, during the “no money down” era, when most homebuyers put little to no down payment for homes.
You stated that your mortgage is “more than it should be”. And you indicated that your lender won’t do a refinance.
Given all of this, you have a couple of options: One, try to refinance your home with a different lender so that your payments are more affordable.
There’s no reason for you to be locked into your current lender – unless you have a loan with a hefty prepayment penalty or something like that.
Getting a refi done will take equity in the home and good credit. If you can pull one off, then at least you’re not as cash-strapped.
Moving to a bigger home is another matter entirely. Not only do you need a down payment (that will be your equity) and good credit, you also need to come up with closing costs, and to figure out how to first unload your current property.
I have no idea what your budget looks like, what you and your spouse’s combined income or expenses are, nor what the real estate market is like in your area.
So it’s difficult for me to offer you options that would help you to out of a financial jam. But you haven’t expressed any other financial problems, outside the fact that your mortgage is too high and that you really want to move to a bigger place.
Recognize that having a bigger house is a “want” at this point, and not a “need.” If selling or renting are not feasible, I don’t see many options left.
You may have to wait until the market turns around and you can sell your existing house in order to come up with the cash necessary for another residence.
It would not be wise to buy another house and simply default or “walk away” from your current condo solely because you want a bigger house.
If the house was greatly under water – say 25% or more – and you and your husband just couldn’t afford it, maybe because you were unemployed or something, then I might suggest considering your options regarding walking away.
But nothing you’ve said to me indicates this. So I think you should try to have a little patience, beautify the home you currently have, and try to ride out this housing downturn.
I know it’s not a pretty picture right now. But in the long term you’ll be glad if you wait and buy your new home under the right conditions, with your finances and your credit in tact.
