How can you skip a mortgage payment
If you buy a new house before selling the old one, what can happen if you fail to pay the old mortgage?
I am researching the process of selling a home and buying a new one. Several articles warn against buying the new home before selling the old one as you may have to pay two mortgages. I wonder why they would keep paying the mortgage on the old house?
Obviously, if you have equity at all, you don't want the house to be foreclosed, but what's to stop you from skipping two or three mortgage payments while trying to sell the old house? Personally, I may have ethical concerns, but is there anything else to worry about?
Late payment fees, damage to your funds, and the risk of not actually selling and therefore missing out on more than a payment or two.
But what's going to stop you from skipping two or three mortgage payments while trying to sell that old house?
Simple: the sale of the old house. You can't sell the house without paying off the mortgage. This includes any missed payments, interest and penalties, as well as additional fees like collections, attorneys, etc.
Bottom line: ethical and legal concerns (fraud allegations etc) aside, the only way to lose money trying to sell this home is by missing out on payments.
There's a much more practical consideration here: your old home may not 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, you will lose a lot of money (possibly tens of thousands of dollars depending on the market) if you panic and rush to move that old house.
It is much better to get a contract to sell your old home first. That way, if your old home doesn't sell as quickly as you hoped it would be a great way to complete the purchase and step back from the deal.
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