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Attention Homeowners Who Want To Move Up

By
Industry Observer

There are probably millions of homeowners who are living in a home that does not fit them.  They made a reasonable down payment when they bought their homes several years ago, and they have made all their payments on time.  The result of the housing crash has left them with a home that is worth less than they now owe, and that makes it difficult to buy a new home.  Payoff of the current mortgage plus a downpayment on a new home plus selling and moving expenses equals a hurdle just too high to make a switch. 

If this description fits you, maybe you're content to remain where you are until the kids grow up and move out.  The growing pains of your current home will have healed themselves, and the place isn't awful.  It's just not what you want.  You may have felt this way for two or three years or more.  Nothing seems to be changing except for the kids getting bigger, and the space requirements incrementally increasing too.

Well, there's a good chance that nothing will substantially change in the next few years, so you'll either have to take some action or try to be as comfortable as possible in the little place you now call home.  If you want something to change, and if you want someone to help you out of the situation, look in the mirror.  Government gridlock is an almost certainty, and the economy does not show any signs of substantial improvement as far forward as we can see.

You can take some action to help yourself.  If you can afford making a higher mortgage payment but can't afford the payoff and moving expenses, start making that higher mortgage payment anyway.  Start making monthly payments on your current mortgage as if you have already moved.  Every extra dollar you pay will reduce the loan principal and also the amount of interest charged.  You may be surprised at how rapidly the negative equity on your home loan drops. 

Your lack of residential mobility will only change if you take some action to make it happen.  You can't start two years ago, so start now.  You owe it to yourself and your family.

Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

Comments (7)
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Lucien Vaillancourt
Native Sun Realty, Inc. - Jacksonville, FL
Jacksonville Florida Real Estate

This is something that most sellers in that situation don't consider doing.  Had they started doing this earlier they may have been able to move on by now.  Not everyone has the ability to increase their payments though.  It is a tough spot to be in.

Oct 02, 2011 06:01 AM
Daniel J. Hansmeier
Rochester, MN

There sure are a lot of people in that predicament. What's even worse are all the people who need jobs or afraid of losing their job. We need some stabilization to build confidence for people to move up. We need our leaders to understand the real world and make changes accordingly. 9 9 9 would solve these issues.

Oct 02, 2011 06:02 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Mike this post is great advice! Too often people want someone or something to blame when the truth be told they can do something about it. I agree with you 100% if you want a nicer/bigger home and can afford it but you cant move due to current price points DO SOMETHING about it! Make that higher payment and apply the extra to principle. You are correct savings adds up fast and it also will prove to you whether you really can afford what you think you can or not and then when you do make the jump you are already financially tested and it makes it much more comfortable. You may find out you can afford it but did you really want to obligate yourself that far? Good post!

Oct 02, 2011 06:02 AM
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Lucien, thanks for reading and commenting.  Although many homeowners are not in a position to make higher payments, there are also many who are able and who want to move up to a higher priced home.  The balance on the old loan is all that's holding them back, and they have the potential to eventually move the housing industry needle to positive. 

Oct 02, 2011 06:06 AM
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Daniel, not everyone can accelerate their debt reduction, but those who can will improve their lives and help the industry a lot.  They will also do for the economy what the government gridlockers are succeeding in not doing. 9 9 9 may help in the long term, but it's just too far in the future for immediate benefit. 

David (US Mortgages), we need to actively encourage virtual moveups, and our national associations need to help with the task.  Thanks for commenting.

Oct 02, 2011 06:15 AM
Maureen Bray Portland OR Home Stager ~ Room Solutions Staging
Room Solutions Staging, Portland OR - Portland, OR
"Staging Consultations that Sell Portland Homes"

Mike this is solid advice for someone who's not in a serious financial predicament to reduce that negative equity.  The overal picture is usually seen as "hopeless" but perhaps with your idea some sellers can begin to plan for a better future.

Oct 04, 2011 04:40 PM
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Maureen, thanks for your comments.  People with really serious financial problems need to consider alternatives to owning a home.  I'm referring to folks who have had a job loss and no way to replace it, chronic illness or loss of an income producer, anything that will probably not improve soon.  For the rest of us, waiting for a return to 2005 home values or an individual government bailout is just not realistic.  The most effective way to eliminate negative equity is to take action to accelerate its reduction.

Oct 05, 2011 02:48 AM
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