I’m in a situation of where I need to sell the home I’m living in, I owe about 240k but due to the current market conditions I may only be able to get a sale of about 200-210k. I would like to buy another home (preferably a fixer upper) to save money and move into a much smaller mortgage, something in the range of 90-120k. So my question is there a way I can sell my home for less than what I owe to the bank and carry whatever balance is remaining over to my new mortgage? I know this is probably an unusual way of doing things but it would drastically help my financial situation.
Highly unlikely you will find a bank (or anyone for that matter) that would do a loan as you suggest. Why? Because they have nothing to protect their money. Say you buy a home for 100K and get a loan for 100K. You still owe 30K on your old home. If the bank rolled that amount into your new home you would owe 130K on a 100K home. If you default, they sell your home for 100K and still lose the 30K.
Your best bet is find a way to hang on to your home until the market turns enough to sell it and break even. IF you must sell now, contact your bank. See if they would consider a short sell (selling it for less than is owed). Usually you will have to be behind on your payments for them to consider that. Best of luck to you.
Would that be true if I the home I purchased had enough equity to cover the previous balance from my current home? Like I mentioned before I’m hoping to find an undervalued home that needs work, would it make a difference to the banks if there was enough equity in the home?
Talk to your banker. Why would they not be willing to work out some deal to cross collateralize your loan with the new property. Their alternative is to perhaps let you default on the original loan and then take over the unervalued property thru foreclosure, never a good idea.