Use of current home as collateral to buy another home

[angryrescuerseekinghelp]

we have owned this home for a little over a year. we would like to get out of the neighborhood since we have discovered since moving here that it has a high crime rate. found this out from personal experience.

we still owe the orginal amount we paid on the home due to intrest only.

we were told by the guy who set up our financing that we could "wash" our mortgage and use the home as investment property by renting it out.

he wanted us to have the home rented before we even got a new home.

i suggested using the home as colateral or downpayment to secure a larger amount of financing to get a nicer home outside of town.

the guy said we could only find a home priced less than what we paid for this home which was $76,600.

I know from doing some research that in order to find a home for less than what we paid for this home would mean looking at homes in even more dangerous areas of town. example the projects!

I would like to know if i can use this home as coleral or downpayment to secure financing from a different company to get a better home in a safer area say in the country?

we dont want to rent this home out because we dont want to be stuck with 2 mortgages one for the current home and one for a new home.

if we can get a real estate investor to buy this house for what we paid for it or what it is appraised at would we get the money or would it go to the mortgage company we are dealing with right now?

need advice since this was a rushed purchase to start with and we dont want to get rushed like that again the second time around.

[aaron]

If you were to sell your home, the money would first go to pay off your mortgage, and any seller-side costs associated with the sale, and you would receive the balance.

[locke999]

one of the resons for buying real estate is to increase you assest.

if you sell you decreas you assests.

so if you made a mistake and dont like the house move ON buy another

house and then you have two houses and more assets!!

if you dont like having assets and dont like the house,RENT.

for example if you get a flat tire,you do not send the car to the junk yard?

fix the problem,move on.

moke

[angryrescuerseekinghelp]

well we thought about renting this home out like jj the guy who set up the loan wanted but we really dont want to be tied down with 2 mortgages.

we will go that route if we can get into another home with a higher value but so far all the places we have contacted have said the same thing stay here one more year and then call them back.

i think we were duped because of the intrest only loan and that is why after being here going on 2 years we have none of the principle payed down yet and therefore no equity from what we have been told.

we would like to get a loan to fix up this home so that we could rent it out. at the same time get enough extra cash from refinancing to use as a downpayment on a new house.

so far we have been told we could not do that. everyone tells me i am sitting on a small gold mine but i cant seem to use it for what i need.

i read someplace that i could propose a deal where i could pay anywhere from $1 to $10 as a down payment on a home and therefore stick the offer but i dont know if that can be done either.

how can we use our home as colateral to get a new loan even though we have not payed anything on the principle due to the intrest only loan?

[TeresaStock]

It would be wise to keep the house as investment and rent it out for 25-30 higher than the current mortgage payment-in a few years you could sell it for a profit-if you could find yourself comfortable with the responsibility of finding a good quality renter. The mortgage guy is wrong to inform you to find a less expensive house, no reason for this-plus it doesnt help your situation at all. I would not invest any money into the property if you are going to rent it out. I would find out what you can afford and try to get a contract with minimum amount of money down. You could possibly open a credit line -I can't imagine your home hasnt appreciated in todays market -and use this as your down payment. But honestly if you are not comfortable with being a landlord just find the house you want and sell this one.