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Here’s my plan. If you are upside down on your home, but you have the income, savings and credit score to buy a bigger, more expensive short-sale or foreclosure… here’s the plan…

Say you owe 300,000 on a home, but you can only sell it for 280,000 (neglecting other closing costs, commissions etc…), you will be able to roll over that negative equity into a new home (say a 400,000) as long as the sales price of the new home, plus your negative equity, does not exceed an 80% LTV… so…

your home: 300000
Sales Price 280000
negative equity: 20000

New home sales price: 380000
Appraised value: 500000
New mortgage amount (new home sales price + negative equity): 400,000 (80% LTV).

This would enable people with solid jobs and good credit to buy more expensive homes in foreclosure, and sell their less expensive homes to new home buyers…
I am currently IN Washington, Capital Hill to be exact, why won’t my plan count??

3 Thoughts on What do you think of my stimulus plan?
  1. Reply
    golferwhoworks
    August 27, 2011 at 10:49 pm

    sounds good in theory but they have not rewritten any thing that would or could do this. So try this sell short and barrow the funds short to close. Buy the more house you want and in 1 year refinance the short to close loan into the new home. This is what is permitted now

  2. Reply
    tink
    August 27, 2011 at 10:49 pm

    Your not Washington so your plan doesn’t count.

  3. Reply
    Rush is a band
    August 27, 2011 at 11:04 pm

    Your plan doesn’t work – here’s why.

    You wrote:
    Say you owe 300,000 on a home, but you can only sell it for 280,000 (neglecting other closing costs, commissions etc…), you will be able to roll over that negative equity into a new home (say a 400,000) as long as the sales price of the new home, plus your negative equity, does not exceed an 80% LTV… so…

    your home: 300000
    Sales Price 280000
    negative equity: 20000

    New home sales price: 380000
    Appraised value: 500000
    New mortgage amount (new home sales price + negative equity): 400,000 (80% LTV).

    Here’s the real issue:
    New home sales price: 380,000
    Appraised value: 380,000 (that’s what someone is willing to buy it for – this makes it the new value – doesn’t matter that the other houses sold for $ 500,000 in the past, your puchase just re-valued the whole neighborhood). New mortgage amount 304,000 (a 380,000 with a 20% downpayment). Still stuck with another $ 20,000 out of pocket to get out of the last home – need $ 96,000 plus closing costs on two houses to accomplish this.

    The comment in the other answer is that ‘you aren’t Washington’ not you aren’t IN Washington. By that, she meant that you aren’t in congress and your suggestions don’t mean anything because you have no power.

    good luck!

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