Martha21: "...Do you think that maybe we should just sit still for a while and put some money away before we risk to much with all that interest and remodeling expense? And, I don't want to end up crying..."

I suppose it really depends on the state of the markets in which you have a house and where you want to buy a house. It sounds to me that you both have some anxiety about it. A degree of anxiety is always there when selling/buying, but how much of what you're presently feeling is more than the normal amount? Putting some money away and waiting can't hurt.

Martha, If I'm reading your intentions accurately, it sounds like you want to purchase this house and remodel it while still living in the house that your in. Then, when the remodel is done, sell the house your in and officially move into your newly remodeled home. You also mention that you don't have much equity in the home your in and don't have a big down payment on the other home.

I'm not a financial planner, but (the big but, lol) in the current housing market I don't think it's too conservative to assume that with little or no equity in your current home, your probably looking at breaking even or possibly being upside-down after realtor commissions. Additionally, you'd have the burden of 2 mortgages during the remodel phase (and potentially much longer) depending upon how long it then takes to sell your home. Bear in mind the one mortgage is 75K higher than your purchase price for the remodeling activities.

So not to be all doom and gloom, but unless your living WAY beneath your current means and have substantial monthly cash flow it sounds like a pretty big stretch. Everyone's tolerance for risk is different so it's a personal decision. The first step is to talk with a few lenders to figure out if you can get financing for the "new" home and remodel, in addition to the current loan. Depending upon the results, you may or may not have a decision to make.

If you find that you can get financing, it would probably be prudent to really sit down with a few contractors to figure out what the remodel costs would run. It would be really disheartening to plan on 75K and then figure out you need at least 150K to cover most of what you want to accomplish.

Another option would be to list your place to test the water. You could always try to negotiate a sale with a 5 month rent back or something along those lines. In this buyers market it would be difficult to accomplish, but you never know until you try. Within 30-60 days, you'd probably know whether you could get what you expect or whether youd be under water. The hassles of getting your home ready to list would be significantly less than holding 2 notes and finding out that its going to take much longer than you imagined to sell your home. You can always say no to offers, doesnt hurt to test the water. The other option would be to sell and then go into temporary rental arrangement. Again a bit of a hassle,but maybe overall less cost and you'd always have the option to move into the remodel to avoid 2 payments.

It's great to be realistic up front and to be asking yourself these questions now, as opposed to getting into financial trouble.

We'd looked at purchasing a different home before we got into the home we're in and as it turned out, I'm very happy that we didn't stretch ourselves. The people that ended up buying the place we liked (but needed lots of work) have done a wonderful job, but have poured significantly more dollars at the project than we would have been able to comfortably afford. I'm NOT saying this applies to your personal situation, but do your homework and do some soul searching to figure out what both you and your hubby are comfortable with. I think it's important your both committed to whatever the decision you make or it will only add to the stress. Best of Luck to you and remember it always seems to work out in the end. (how marsha marsha marsha was that statement...but true! :)

We are in North Carolina where there has been a great housing market boom in our area for as long as I can remember. However, it is down and builders are slashing their prices in an effort to sell brand new spec homes. We are seeing prices being cut by 20% or more. Some builders are openly advertising $70k-80k off of new homes. The large national building companies are cutting homes so much that people who have already purchased in those neighborhoods now have homes that may not be worth as much as they had paid due to the new comps (upside down).

I'm seeing homes (built between 2002-2005) staying on the market for 2+ years in our previous neighborhood. At the time we moved, our realtor said that houses were selling there at a rate of 2 per month. It has since slowed down and there are around 50 homes for sale, which can represent a 2-4 year supply in that one neighborhood.

We are even seeing auctions of expensive homes -- very unusual. Those homes aren't selling even with the auctions, so they remain on the market unsold.

There are over 17,000 homes for sale in our area of NC. It's a market for buyers, not sellers. So, the risk is in the selling of an existing home.

All we can do is report what we are seeing in the real estate markets where we live. In terms of remodeling, homeowners now have to decide if remodeling their home will put it above the values in the neighborhood.

I wish you the best on making the decision. The house you love may be on the market for a very long time, so perhaps you'll have plenty of time to make the decision.

We did just what you're talking about.

We bought a house that had been on the market for over 2 years. We started remodeling immediately, trying to get all the work done before we moved in so as to avoid having to live in chaos and construction.

We simultaneously readied our old house for sale. This included having the exterior painted, having a new garage door put on, landscaping, finishing all those pesky unfinished projects, cleaning, and staging. (Wow. No wonder I was exhausted!)

Also, we had completely redone the old house almost top to bottom. New kitchen, new carpet, new pool area, new lighting, almost every room had been re-done, so we knew we'd have no trouble selling, we just needed to sell FAST. It was a gamble, but I'm in real estate, so I was *very* familiar with what it would take to get it all done.

I knew my neighborhood, so I priced my home for about 10k less than I could have, because I knew it would create a feeding frenzy. We had multiple offers. This is what we needed; we needed to create such a buzz that the house would sell quickly so we didn't have to keep making double mortgage payments.

So I guess I'd say the following:

-Know your RE market. The holidays can be a great time to sell, because only serious buyers are out there. The holidays are a good time to sell in our area. But we have a VERY good market, and we live in one of the top rated school districts. You know the adage, location, location, location....

-Know your competition. Outshine and underprice them. Be better than any home in your price range, and then be slightly cheaper than them.

-Know your budget. The remodeling on the new house WILL cost more than you expect. Be prepared for that.

-Expect to spend more money on the old house. It takes money to sell. We spent several thousand dollars readying our place for sale. There's also some weird Murphy's Law for real estate. "Once you put your house on the market, something will break". I don't know why, but it happens all the time. Plan for it.

I'm thrilled that we did what we did, though. Even though it felt like my checkbook was on fire for about 2 months LOL! Having lived through a period of time where we remodeled slowly, we knew we did NOT want to do that again. So to us, it was worth every penny to get the work done before we moved in. Even when we had to pay double mortgage payments, I would laugh and say "Man, this is the best money we ever spent because we're buying our SANITY". And I meant it!

We have always sold before we bought anything, even if it involved moving into an apartment or rental house in between. I'd rather sleep at night in a house I'm renting than toss and turn in the one I'm trying to sell. Actually, while you're renovating, it's kind of nice to just be in a rental that you're not emotionally invested in. You can really concentrate on the renovations, which always take a toll mentally as well as financially. It may seem like a hassle to move twice but it has ALWAYS paid off in the long run.

We've decided to move, but we really feel like we HAVE to, for family reasons. We'll sell in Florida, where the market is terrible and buy up north, close to family, where we'll have the buyer's market advantage, though not much is for sale it seems.

My feeling is that if I had a choice, I would stay put. But I don't feel like I have a choice. We'll probably take a loss and that will stress my DH out, but once he's up there shivering in the snow, right up the street from his grandchildren, he'll forget his pain!

I think you have to decide how much pain you will have after the fact. If the move puts a one-time stress on your finances and feelings, you'll get over it. But if you're going to put yourself into a continuing financial pressure cooker, don't do it. JMO

Having just sold a house after our new one was complete, I would be wary. Our old house sold in a week with multiple offers-- twice. Both times the buyers dropped out for different reasons. Finally I ended up with what I dreaded, having to sell an emty, undecorated house. It sold for 9K less than the first two times and we ended up with 3 more months of mortgage than we should have. And our market was strong at the time. Since then it has softened. New-ish houses can be hard to sell if there are other houses going up nearby. I'm not suggesting it can't be done, but it is certainly a risk. Is there a way to buy the new house after you have sold the old one? That might entail two moves (unless you were able to rent back)but you would not get left holding the bag. If the rental market is strong you could consider renting your old house until it sells. Good luck!

our buying a house we both love, but the house needs about 50 to 75K in remodeling before we could move in

Hi Martha,
Interesting post.
Finding a home you both love is a big thing so I would say the question is... does it NEED the remodeling before you move in or do you WANT the remodeling before you move in.
If it needs it I would be cautious on taking the chance of two mortgages in this market , it you want it but could deal with living in it awhile the way it is I think it would be worth the "lack of perfection" for awhile to be in a home you both love. Please keep us posted. Kareen

Reno can correct me if I am wrong, but I have been told that equity in a house and the neighborhood is prime in 2-5 years and by 10 years, the houses although, do not appreciate, do not gain equity as quickly. Of course, that depends on the market and the market is us. If we keep talking it down, then it will be down. Wall Street hears us talking. Rates were cut this week. They are listening because we are the consumer.

In the current market, even if you are in a market that is still strong, there is no way I would buy a house now needing to get a certain money out of my house in x months. IMO prices have not yet finished falling and things are going to get worse before they get better. Not what you wanted to hear, I know, and I'm sorry, but I think it is VERY risky for you to attempt to do this without the finances to carry you through in a worst case scenario (your house loses another 20% of value and/or it takes a year or two to sell). In the long run it will not be worth the stress.

NO way. Why not put your existing house up for sale and see what happens? It would sure suck to end up with house payments for two years and still take a huge loss...which is what happened to MIL.