refinance current home to buy new home? - Mothering Forums

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Old 07-20-2010, 06:13 PM - Thread Starter
 
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Ok here is the details: we currently live in a 700 sq ft. no basement 2 bdrm old house with a small lot in town. Its cheap $300 a month Morg. We have 7 years left to pay on it. Now We are looking at purchasing a home that has 5.1 acres for 3 bdrms, full basement, for $129,000. We could rasie animals, become more self sufficient, what we have strived for. Since my husband decided to start his own business, We are in a bind for down payment.. obviously we would need $26,000 to put down on the house.. we only have 7,000. in savings. We would like to use the proceeds of selling our current house but not sure we would be able to sell in time for offer. So we have $30,000-40,000 in useable equity in our current home Would it be not a good financial move to refinance current home into a 30 year to get the money out of it to put down on new home and then sell or rent out current home.. being that we would refinance to 30 yr mor. payment would not change. We carry not other debts.. just my husbands line of credit for his business.. Am I totally upside down in my thinking?
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Old 07-21-2010, 01:16 PM
 
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If you refinance, what would your new monthly mortgage payments be?

Could you rent it out for more than that amount to cover property taxes, insurance, utilities, repairs on that home? What is the rental market like in your area?
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Old 07-21-2010, 01:22 PM
 
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I don't know where you are or what the economy is like in your area, but my thought is that, generally speaking, real estate is a good long-term investment. If you can swing payments on your old house and at least break even by renting it out, go for it. If you can't, and the market in your area is good (ie your house is not going to sit on the market for the next two years depreciating with a "for sale" sign in front of it while local hooligans squat in it, strip the copper wiring out and break all the windows), then that's not a bad thing either. You've just traded something less valuable for something more valuable (and more practical for your family).
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