I'm researching the process of selling a home and buying a new one. Several articles warn against buying the new home before the old one is sold because you may end up having to pay two mortgages. I'm wondering why one would continue paying the mortgage on the old home?

Obviously, you don't want the home to go into foreclosure if you have any equity at all in it, but what is to prevent you from skipping two or three mortgage payments while trying to selling the old home? Personally I might have some ethical qualms about doing this but is there anything else to worry about?

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    -1 The mortgage on your old home is a legal contract that requires you to make monthly payments until the loan is paid off. That you are looking for a new home, or have bought a new home, or have moved out of the old home and are living in an apartment while you look for a new place, or even have moved out of the country, does not relieve you of the contractual obligation to make the monthly payments. If what you have learned in the "research process" is what you ask about, I recommend throwing all that research out and starting all over again with a fresh slate. – Dilip Sarwate Apr 19 '12 at 18:26
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    +1 to question - it's a bad idea, but it's not -3pts worth of terrible to ask – user296 Apr 19 '12 at 20:46
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    This isn't a site about ethical debates. It's a site about personal finance. I vote to close. – gef05 Apr 19 '12 at 21:46
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    "Personally I might have some ethical qualms about doing this but is there anything else to worry about?" -- That's not asking for an ethical debate. It's explicitly sidestepping it and asking for personal-finance implications, and several of them exist, and it's not a bad idea to know about them. – user296 Apr 19 '12 at 23:45
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    I don't understand why people are piling on. This is a valid question. It's not an ethical debate. It's not asking for how to do something illegal. It's actually a very practical question. I quote: We expect answers to generally involve facts, references, or specific expertise; this question will likely solicit opinion, debate, arguments, polling, or extended discussion. The answer is very factual. There is no opinion. There is no debate. There is no argument. So far 4 of you have ignored the very guidance in the close reason you've selected. – George Marian Apr 20 '12 at 2:49

Late-payment fees, damage to your credit, and the risk that you might not actually get to sell and may therefore miss more than just one or two payments.

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    And the holder of the mortgage will require you to pay anything outstanding (principal, interest, fees, etc.) at closing in order for the sale to go through. So you are not "saving" anything. – KeithB Apr 19 '12 at 18:57

but what is to prevent you from skipping two or three mortgage payments while trying to selling the old home

Simple: the selling of the old home. You cannot sell the home without paying off the mortgage on it. That includes all the missed payments, the interest and penalties, and additional fees you'd incur like collection, lawyers, etc.

Bottom line, ethics and legal concerns aside (fraud accusations etc), if you want to sell that house, by missing out payments you will only lose money.


There is a much more practical consideration here: Your old home may not, in fact, sell in two or three months. Or even in a year. It will leave you desperate. Even if you have enough equity to discount the price enough to move it, you will lose a ton of money (tens of thousands of dollars potentially, depending on the market) moving the old house in a panic and a rush.

Much better to put a contingency on the contract about selling your old home first, that way you can lock in the purchase, and back out of the deal if your old house doesn't sell as quickly as you hoped.

protected by Chris W. Rea May 14 '12 at 14:18

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