I’ve been trying to figure out how this would work? We have a house valued at 110K owe 50K and want to buy a friends place at original price of 140K owes 30K. He now would like to trade houses. We would reduce our selling price 60k, and he would reduce his 60K. I would still have to pay off his orig. loan and he would still have to pay off ours, I know that part. Just can’t figure out how a mortgage could be structured? If we just “traded equity” I wouldn’t have any money for a down payment… Anyone have advice on this?
You buy his at $140K, he buys yours at $110K. The proceeds from the sale of your house pays off your mortgage, same with your friends house. He has $110K equity in his house so his sale proceeds may be enough to purchase yours outright. You only have $60K equity in your house, so you will need to bring new financing to the table to buy his house.
If you want to swap deeds without the formality of a sale and purchase, then agree to assume each other’s mortgage loan. Assuming the lender’s will agree, you are getting $30K more house and $20K less debt. This $50 difference is equal to the $50K in equity your friend is giving up by taking your house and assuming your debt. You balance the equity by giving your friend $50K cash. If you don’t have the cash on hand, maybe your friend will carry a $50K second mortgage on your new property instead.