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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?

Ben Williams
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3 Answers3

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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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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.

littleadv
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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.

Yishai
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