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I bought a house a couple of years ago. I don’t have much equity in it. Now my fiance and I want to buy a new home, but we won’t be able to sell my home for what is owed on the mortgage. Are there programs that let you borrow on your new mortgage to allow you to pay off previous mortgage?

10 Thoughts on What happens if sale price of house does not cover mortgage pay off?
  1. Reply
    Pat B
    March 17, 2012 at 11:02 pm

    Not that I know of. You will either have to bring funds to the closing to pay off the balance, or get the bank to agree to take less (which is doubtful if you are not in financial trouble or facing foreclosure).

  2. Reply
    Princess Leia
    March 17, 2012 at 11:50 pm

    1. No programs, unless they are scams.

    2. It would be considered a short sale and you need to get your bank’s permission to sell it for less than what is owed.

  3. Reply
    kapn
    March 18, 2012 at 12:19 am

    Nope………your stuck…………you will have to pay the difference on the mortgage balance if you sell……..you can’t borrow on mortgage negative equity………..that’s why we are in the mess we are in…….

  4. Reply
    HelpMeEscrowStuff
    March 18, 2012 at 1:00 am

    Right now, mortgages are tough to get. So for your new house, it is entirely unlikely whatsoever that you will get a loan for more than 100% of its value. In fact, it’s unlikely you will get anything for more than 90% of its value. This means you’ll need to come up with 10% (or 3% if you do an FHA loan) for the NEW home purchase *AND* have cash in the bank to pay off your old home after commissions ‘n such. Personally, i would not suggest buying a new home if you are in that position.

  5. Reply
    stan c
    March 18, 2012 at 1:22 am

    If your Realtor was aware that there is a short sale, he should include that with your new mortgage. If they refuse do help, then you’ll probably need a real estate attorney.

  6. Reply
    georgebukshi
    March 18, 2012 at 1:39 am

    Some banks might agree to a short sale, a sale for less that the amount owed, in settlement for the full debt. But that has negative implications on your credit. Also banks probably won’t agree to it if you’re current on your payment.
    What your proposing would be tough to pull off. You could make an agreement with the seller of the new house to give you money back at closing, by inflating the purchase price, so that you could pay off the other house. But the problem with that is the new house probably will not appraise high enough to allow you to take the cash out, especially if you’re deep underwater on the first house.

  7. Reply
    stratus_31
    March 18, 2012 at 2:30 am

    Your best bet……unless your fiance has the extra cash……would be for y’all to stay put for a couple more years……that’s when the market should be picking up again……or sell it by owner for the price you need and cross fingers. Good Luck.

  8. Reply
    will_591
    March 18, 2012 at 2:56 am

    no. you have to have clear title to transfer. That means you pay off what you owe, if the mortgage is more than you sell it for, then you bring money to closing. The house is the guarantee that the loan will be paid. Without the collateral, you can’t transfer a balance. You might have to sell it as a “short sale” and take a loss. Even on a foreclosure, you still have to pay the difference between what it sells for and what you owe….

  9. Reply
    chatsplas@sbcglobal.net
    March 18, 2012 at 3:10 am

    NOPE.

    You have to cough up the difference in this short sale. Might be better to stay put and buy later when market is better? Difficult to sell except at significant loss in this market. Or to add on or improve current home.

  10. Reply
    godged
    March 18, 2012 at 4:04 am

    As the others said, NO.

    Your best bet is to either stay put or rent the current house out. If you do a short sale, your credit will be adversely affected and you won’t be buying anything for awhile.

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