Need quick help - Real estate dilema

[shashabell]

I have been looking for a home. I want to move to a different city but have had no luck. Well, the house across the street from me just came up on the market (foreclosed HUD home.) The price is less 1/5 of what I have been willing to pay in the other city.
I currently live in my deceased mothers home which is paid off. I can either sell it or rent it out.
Now the dilema - Do I buy the house across the street, move in there, pay it off in a year or two, and then look for my dream home in the other city? What do I do with my current home? Sell or rent? My neighbor said he would rent it out from me.
What I'd like to do is buy the house across the street and rent that one out and stay put here until I find a home in the other city but it's my understanding that with a HUD home, you have to actually buy it to live in it.

Also, if I do buy the house across the street, which is better to do? A 20 year mortgage and pay it off early or a 10 year mortgage and pay if off early? I'm assuming there's a benefit to one of those options.

[ealmond]

I do believe you are right and have to live in the HUD home you buys. The benefit to a 10-year mortgage should be the interest rate. If it is a big difference between the 10-year & 20-year, go with the 10-year. If they are around the same, I'd go with the 20-year because you never know what life will bring you!

[disabledvetswife]

Another benefit of the 10-year mortgage is you will reach the threshold where more money goes to principle rather than interest sooner than the 20-year mortgage - which will allow you to pay it off even faster.

However, as pp posted, if the interest rate between the two isn't that much of a difference, you may want to opt for the 20-year mortgage because your payments will be lower - and you don't know what life will bring you. It is much easier to pay additional money than to come up with a higher mortgage payment if something happens.

I don't know anything about the HUD requirements - sorry.

[CW&M Mom]

I would make sure the HUD house isn't a money pit...Have you been inside?

Your current house....do you think it would sell for what it's worth? Would you have to do much to sell it? Also if you sold it first, while you live there, you don't have to pay capitol gains tax, however if you move out of it, buy another house and then sell it. you might...and believe me you don't want to have to pay capitol gains.

as for renting. when you get good renters...it's worth it, when you get crappy ones...it's not KWIM.