Purchasing new home... my options?

I am no expert, but you basically have not got a good solution imo. You can break even on the sale, move and pay about what you pay now on a new mortgage (but you probably do not have the down payment) and as such probably would have a hard time getting a new mortgage. Taxes may or may not be better where you want to move to as well. And you would incur the realty fee (sell it yourself to save that), closing costs, appraisal fees, higher commuting costs depending on where your job is, etc.

I would consult with your accoutant (or get in touch with one if you do not have one) and see what if any options are available on cutting a deal with the bank and on how your finances break down. Barring him having some advice that makes it work out for you, I think you may just have to ride it out assuming property values in your area have bottomed.

Sounds like you need to really buckle down and save for a few years.

Save up and move to the neighborhood you desire, when you can afford it.

We can afford more of a mortgage right now. We purchased our home in 2009... someone walked away from it and it was bank owned. We got a really good deal on it but prices continued to drop. Prices around where we live have slowly leveled out and we paid our home down to what it's worth. I'm just not sure of any other options besides saving up a down payment for a new home.

Depending on the location of the area you want to move to, a USDA Guaranteed Loan may be an option, No down payment is needed.

prices will start going up soon waitt for forclosures to clear

Quote from MissionHockey : We can afford more of a mortgage right now. We purchased our home in 2009... someone walked away from it and it was bank owned. We got a really good deal on it but prices continued to drop. Prices around where we live have slowly leveled out and we paid our home down to what it's worth. I'm just not sure of any other options besides saving up a down payment for a new home.

Sorry, but if prices continued to decline after you bought the house, you did not get "a really good deal."

I had a very similar experience accept I had equity ($200k) to put on the new house plus $100k from my 401k. We lived in the worst school district in the county. It was either private schools, home schooling or move. We chose to move to the just about the best school district in the county (1/2 hour away from the old house). Our old house has continued to lose money - worth about $100k less then we sold it for 3 years ago but our new house is worth about $50k more then we paid. I would do what you have to do to move our of that neighborhood and into a better one. Beg, borrow or "steal" (from your 401k perhaps?) to do it.

We drove through our old neighborhood recently and there are nothing but cars parked all along both sides of the street even though most houses have 2 car garages and all have driveways. This is a great way to determine the class of a neighborhood. The more cars parked in the street, the lower the class of the neighborhood. We also saw several signs posted for zoning variant requests to house multiple families in one house. That is the final kiss of death. Bad neighborhoods rarely get better.

In response to crazygrow:

The house sold three years prior to us purchasing it for $420,000 and we purchased it for $213,000. Home prices continued to drop and it's worth about $195,000. The neighborhood isn't bad; we live on a cul de sac in a housing track. Our only problem is we have three little ones and want them to attend a better school. The better schools are about twenty minutes away.

Quote from dealgate : We drove through our old neighborhood recently and there are nothing but cars parked all along both sides of the street even though most houses have 2 car garages and all have driveways. This is a great way to determine the class of a neighborhood. The more cars parked in the street, the lower the class of the neighborhood.

I am not disagreeing but I would love to hear your logic on this one!

Quote from MissionHockey : In response to crazygrow: The house sold three years prior to us purchasing it for $420,000 and we purchased it for $213,000. Home prices continued to drop and it's worth about $195,000. The neighborhood isn't bad; we live on a cul de sac in a housing track. Our only problem is we have three little ones and want them to attend a better school. The better schools are about twenty minutes away.

I don't want you to feel like I'm being an ass, but I wouldn't consider any investment where I lost money a good one. But we all take risks. I bought a short sale when we moved to Utah two years ago, put 3% down on the FHA loan. I just refinanced into a conventional loan and lost PMI because the house has appreciated 25% and I now have 20% "equity." I fully understand that I got lucky and this luck had nothing to do with me.

Then again, I still own my house in GA and am still down substantially. I made the decision to hold it instead of selling it at a small loss and now have a big loss.

Just be sure to be honest with yourself. It probably wasn't a good move on your part, but it is easy to second guess people when you are looking back.

Quote from MissionHockey : Hello everyone, My wife and I currently own our home. We want to move approximately twenty minutes away where the schools are much better. I figured I would see if you guys could think of any other options we had. Right now, our house is worth as much as we owe on it. We could walk away and break even. However, we do not have a bunch of money saved up for a down payment for a new home. What are my options of getting around this? I have excellent credit (800+) and we both have steady jobs which produces a double income. I know before the housing market took a dump, people would use the profit they made to put towards a down payment on a new home. Unfortunately as we all know, it's not the same now a days. Any input would be appreciated, thank you.

Because you have good credit and double income, you MIGHT be able to get a mortgage without much money down. You'll need to talk to a bunch of lenders. However, you'll definitely need to pay PMI. They MAY allow you to lump PMI into your mortgage payments, however. So if you'd need to pay 10k in PMI and you had a 100k mortgage, you'd end up having a 110k mortgage. The upside is that your monthly payments would only go up a little. The downside is that you can't get out of paying PMI by paying off principal ahead of schedule.

However, you also need to sell YOUR house which might not be easy to do. If you want to move out because of the school district then families with kids (or who are planning to have kids) probably don't want to move into your house. So you've reduced your buyer's market a lot. Also, when you say that you could "break even," did you take into account real estate agent fees and taxes? If you have 250k on your mortgage and you sell the house for 250k, you're taking a loss.

Quote from bonkman : The downside is that you can't get out of paying PMI by paying off principal ahead of schedule.

Are you sure this is true? If I remember correctly, you only have to pay PMI until the Loan To Value (LTV) is 80%- that is, until the loan is equal to or less than 80% of the value of the property. In fact, I believe the lender/escrow is required to stop collecting PMI when the LTV hits 78%, even if you don't know say anything. Wouldn't paying off principle help you reach the 80% LTV earlier, since you would have more equity in the home?