What the heck is my friend thinking?!
A friend of mine has an idea that I think is not sound. He owns house A but wants to buy house B. House B is desirable because it is a better fit for him and his family and it is selling for 30-35% less than its estimated market value from last year. This would make his monthly payment on house B less than house A. The house is not in a neighborhood that is full of oversized MacMansions, just a good middle class neighborhood in the burbs. He wants to get a loan for house B from a new lender and then in good faith try to sell house A to pay back the loan. What worries me, but not him, is that he is comfortable with giving the home back to the bank that has the mortgage for house A if it does not sell in short order. He is not worried about the hit his credit score will take should he decide it is best to give up house A because he says for a number of years he will not take out a loan for anything after the purchase of house B. He regards surrendering house A as a business decision. I think this is a bad idea and I have told him so.
What do you think of his line of thinking? As always I appreciate the input of fellow Fools.