Underwater Mtg

I am sorry to say this but why would you go into more debt, to get into more debt? It makes no sense to me to borrow money to buy another house when you don't have the money to begin with. What would you do if you did buy the second house, and had something to wrong with it and needed money to fix it? You'd be up the creek! I know that's not what you asked but that is my first thought.

You'll have to rent the townhome and then rent in the district you want to be in.

As far as I know, can't get blood from a turnip, or money from an upside down mortgage.

Nope. Your current home has no equity. And you're already in debt....why would you put yourself even deeper into debt? That's a pretty poor choice.

I suggest you either stay in your townhome until the market improves, or rent the townhome out and claim that rent as income, which will improve your chances of being approves for a loan on a new home.

I suggest you talk to a bank about your options.

Well no, you can't get a loan from your first home because there is no equity in it for you to borrow. Your home has to be worth more than what you own in order for you to borrow from it.

If your credit is good and your income supports you being able to qualify to have not only your outstanding debt but to add to it, you could rent out your townhome and then either rent or buy another home. At that point though you'd be landlords and that would involve quite a bit of financial savvy, complex tax filings, etc. My guess based on this question is that owning rental property is not something that would be a good fit for you.

Your best bet is to rent the townhome and look for programs to help you get the down payment for your second home. The government has some plans you can look into that help with down payment.

If you rent the townhome, you can sell it when the market improves.

Second option would be to short sale the townhome and buy/rent another home.

There is no way to get money off of a loan that is underwater. You owe more than it's worth--why would a bank GIVE you money in that situation?

Good luck!

Well, if your townhome is underwater then you don't have any equity to borrow from. As far as qualifying for another home that's not likely anyway. The banks look at income to debt ratio so your townhome is a large liability. You'd have to make enough to cover both mortgages.

Why would you want to take on yet another debt? You aren't allowed to do what you are proposing because you have no equity to borrow from.

Instead, consider renting out your townhouse and rent a place in the school district you want your children to attend. First, go to a real estate agent who not only sells properties, but also works with rentals. (A lot of real estate agents started doing this when the economy tanked...) The agent will tell you what you can realistically rent the townhouse for and can help you find appropriate renters, help with a contract, and help you find a property manager. Then talk to an accountant and find out the tax implications of doing this. Figuring out what's what with the accountant will help you decide how much money you should plan on spending on a new apartment.

It would be very difficult for you to get a loan, while you are underwater on your mortgage. Your debt ratio just wouldn't work, and you don't have any room for equity.

There is absolutely no logic or wisdom in trying to secure debt, in order to get into more debt.

Do you make enough money to pay for two mortgages? That's what the banks need, in addition to your credit rating, debt ratio, and everything else.

Nope and in fact if you do sell you may have to bring money to the closing if the selling amount doesn't cover what's left on your mortgage. When my daughter was looking at houses the one she loved was way overpriced for the market because the owner was under water. He took it off the market and rented it instead. Bummer because it was a really nice house.

Can we perhaps look at this logically? A second mortgage is a home equity loan. Do you have equity? That would be your answer.

If you qualify you can get an unsecured loan and use that for a down payment but I would imagine at that point your debt ratio would prohibit you from securing another mortgage.

If your house is underwater, I doubt you can get a loan, especially as a down payment on a second loan.

Sorry to be mean, but I certainly hope not. It's lending practices like that that got us into the recession.

What did you plan on doing with the first mortgage?

I can't answer your specific question but I would look at renting out the townhome, and then renting a home in the school district I desire.

I agree with another mom - I would be very nervous to pile more debt on an upside-down loan to take on more debt. That sounds like a good way to lose everything imho.

JMO.