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Need to Move but Can't Sell? Try HouseTrading

Interested in trading your house but not quite sure what to believe? Have you heard that this practice isn't legitimate? House trading is a legitimate business that matches two sellers and two buyers together to trade homes. Websites such as onlinehousetrading.com can give you more information. This is particularly useful for military families who need to move -- and fast.

Let me first identify myths and truths:

Myth: Your equity position matters.

Truth: It doesn't matter if you have $1,000 equity or $500,000 equity because you're getting a mortgage for the other house.

Myth: It won't work because banks won't let you trade mortgages.

Truth: This is true, but with house trading, both parties simply buy each others homes. Both parties acquire a new mortgage or pay cash.

Myth: Both homes need to be the same price because if not you have to make up the difference in cash.

Truth: Just because you sold your home form $300,000 doesn't mean that you have to buy one for the same price. As long as you can qualify for the mortgage you can buy what ever you want.

Let's look at a couple of typical scenarios -- upsizing and downsizing a home:

Upsizing:

- Seller A has a home valued at $350,000.
- Seller B has a home valued at $450,000.

Equity doesn-t matter. Seller A would get a loan for Seller B-s house and Seller B would get a loan for Seller A-s house. Put simply: They buy each other-s homes.

Downsizing:

- Seller A has a home valued at $550,000.
- Seller B has a home valued at $450,000.

Equity doesn't matter. Seller A would get a loan for Seller B's house and Seller B would get a loan for Seller A's house.

House trading may not be a ideal for every military familiy, and it's wise to consult your financial planner, real estate agent, or on-base financial counselor for more information about this process.

For more home buying advice, visit Military.com's Finance Channel.

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