Becoming a Move Up Buyer When You’re Underwater on a Mortgage

Many homeowners felt stuck during the housing decline when their homes weren’t worth as much on the open market as they had paid. Now more homeowners make the jump from a starter home to a better, more spacious home as home values dramatically increase across the country. Even if you still owe more on our mortgage, it’s possible to become a move up buyer. Being “underwater” on a mortgage isn’t as much of an issue as many homeowners simply rent out their current home so they are free to pursue a step up home in a more prestigious and safe neighborhood. According to a recent piece by the SunSentinel, a new report shows fewer people are underwater on mortgages. Negative equity peaked in late 2011 in South Florida and other markets affected by the housing boom.

•   Avoid a strategic default

Real estate experts advise against a strategic default or no longer making mortgage payments. If you do have equity in your home, it’s prudent to avoid taking out a second mortgage or home equity line of credit before hunting for a new construction home. Move up buyers should also avoid refinancing to take out equity or cash before pursuing a home purchase.

•   List your home at a higher price

If you don’t want to rent out your current home, consider listing it at a price that is the same or just slightly lower than you originally paid. With the housing market booming, you will likely be surprised to find your home is worth significantly more than it was just one or two years ago. Some homeowners pay the difference between the amount they owe on the mortgage and the final sales price if the difference is small.

•   Rely on a professional property manager

Most of the excuses homeowners give for not wanting to rent out their current home relate to the grueling task of being a landlord. With a property manager overseeing your property, you can enjoy being in your new home. Move Up America offers a Guaranteed Lease program that guarantees your lease payments for up to two years. If you want to get out of lease obligations, they also provide a Lease Buyout program that’s appealing to people who want to jump on the lower home prices and interest rates while available.

At Move Up America, we provide smart solutions for homeowners who are underwater on their mortgages as well as those with plenty of equity to afford a nicer, step up home. For more information on our Move-Up program, Contact Us.

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