How can people buy another house when they already have one?
I mean, say a person wants to move and buy another house
But they already have a house and a mortgage to pay on it.
How are they able to just sell the house and go and buy another one?
I mean, what happens to the mortgage on the old house? Don’t they still have to pay it off? What about all the money they put into the mortgage and equity?
Passive Income
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February 1st, 2010 at 12:56 pm
I don’t know, now I’m confused with all of your questions and would like to know too.
February 4th, 2010 at 9:39 pm
If they have enough money to pay both mortgages there is no problem. Sometimes, people buy a second house as an investment property – they can’t live in both houses, so they rent one and pay one of the mortgages with the rental income.
February 6th, 2010 at 10:11 pm
The old mortgage is satisfied (paid off) at closing, out of the proceeds (money) they get from the sale.
Say the house originally sold for $100,000. They put $10,000 down and got a $90,000 mortgage. The house now sells for $200,000. They still have $80,000 left on the mortgage. They get $200,000, pay off the old mortgage with $80,000 (and pay some other expenses – their lawyer, the bank’s lawyer, closing costs, etc.) and are left with about $100,000 to put down on the new house (or do what they want with).
February 8th, 2010 at 12:08 pm
If your old house has not sold, you need to pay mortgages on both the old house and the new one. Once the old house sells, the profit from the sale goes to paying off the old mortgage. With any income you made from the sale, you use that as a down payment for the new house. Usually people are not approved for two mortgages so you need to sell your old house first then buy the new one. You can put in the conditions of selling the house that it is not available for 4-6 weeks so you have time to close on your new house.
February 11th, 2010 at 7:39 am
If you want to sell or move to another house, the NEW Buyer will get a new loan and the proceeds from that pays off your ‘old existing’ loan.
Then the difference between the sales price and the loan is cash that is given to you at close of escrow at the title company. Another idea is
If you have a lot of equity, pull out some of your equity, and use that for a down payment for a new home. Then lease or rent out your existing house, that’s how you may become wealthy, even now.
Make sure you check out the qualifications of a ‘new buyer’ if you carry any finance for them or offer a lease option.
February 12th, 2010 at 4:48 pm
Of course you have to pay it off, because you sell or want to sell does not relieve you of the responsibility.
Typically, this is what happens:
You place your home on the market. You shop for another home. You either obtain a bridge loan, or you make offers on the new house contingent on your selling your home.
The sale of your old house will hopefully cover what you owe on the mortgage. Bear in mind there are a ton of buyers looking for seller concessions such as you paying their closing costs, so get a sellers proceeds sheet which tells what you will walk away from the table with.