I have an existing home that I would like to rent and buy a new house, How to do this?

Question

I have an existing house with approx. $60 - $70K equity and a $190K mortgage. Unfortunately renting the house would not cover the mortgage payment of approx. $1250.

I want to buy a new house @ approx. $380K with little down.

What are my options?

Affordable new mortgage payment would be approx. $2K

Any info would be much appreciated.

BTW, Credit Scores are in the 800's, zero debt except for $190K mortgage. $100K income per/yr.

Answer 1

Depending on your credit you may be forced to put more down on the new property than you are willing to part with. High loan to value loans, although still available are starting to become very pricey in terms of interest rates. There are some propgrams out there which you may qualify for ay 97% or 100% loan to value with mortgage insurance which will minimize the downpayment requirement.

Where your real hurdle is going to be is your debt to income ratios. Without knowing your income at this point this is supposition. When the lender looks at your rental income they are only going to allow you to count 75% of that income. They will 'hold' 25% out of the equasion as reserves for vacancies, repairs etc... You will also need to have a rental agreement in place so that the lender will count the funds. They may also ask for a copy of a deposit check from the new tenant.

All this being said I would approach your loan officer and have him/her start working out the loan approval. You really need to start here to make sure that you will qualify to purchase your new home.

Best of luck.

Kevin 949-375-2380
[e-mail]

Answer 2

You did not say how much you could get as rent from the home you are presently residing in. If that is something you can absorb with little or no problem you will not have a problem getting a new mortgage loan with the scores you have.

As far as your new payments on your new home is concerned this will be determined by your credit score which will dictate your interest rate.

You should contact a mortgage broker to complete a mortgage loan application.

He will need several documents and lots of information. I will get you started so locate the following and have them available so you can take them into his office or fax them to him.

#1 Two years of federal income tax as well as the W-2's

#2 One complete month of pay stubs

#3 Six months of bank statements from each bank you are currently using to include any statements from your 401-k plan.

Once he completes your application he will then run a credit report to find out your credit scores.

Your credit scores will determine your interest rate, the loan program you are qualified for, how much you will have to put down on the property if anything. Some qualify for a 100% mortgage, you might be one.

If after he gets your credit score, look at your application, he might determine that you will not need your mother at all and you qualify alone. Of course the reverse could be true also.

Now is the time for you and the mortgage to sit down and figure out the best mortgage program for you. You guys will discuss the amount a lender will allow you to borrow to purchase a house, the interest rate of the loan you are qualified for and several other things. Make sure you ask all your questions at this point. Once this is done he will then issue you a pre-approval letter.

Once you have your pre-approval letter you are now prepared to find a real estate agent to look for a house to purchase.

When you find a property to purchase the real estate agent and mortgage broker will walk you through the rest of the steps necessary to close. You will sign a purchase contract, an appraisal will be done on the property top prove value.

A few days will go by 7-10 after which you will be called to sign your loan docs so you can now move into your new home.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

do u pay ur mortgages on time? if u have no late payments u wont have a problem getting a 100% loan. owning the first home is considered liquid equity so it will look good when you go and finance this second home. I would set up rental purposes first bc u dont want to get stuck paying 2 monthly mortgage payments. Is there any way you can split the house into two untis so you can collect two monthly rents. you can do a cost to cure to install any additonal units.
you can always try talking to alender to see if you can refiance and try to get them into one monthly payment but thats not smeothing i woudl suggest. shop around until you find the rtight broker who will work for you, a lot of peopel out there take advantage of the fact that you know little about this , so if it doesnt sound right dont take the bate and make wure its a fixed rate!

Answer 4

Little down, under 20%, usually means mortgage insurance, which means your monthly payment will be higher for no reason. $2k mortgage is not realistic for your new house. Plus, since rent won't cover the investment property, you will be paying on that difference too. With an income of $100k, you can afford a higher mortgage, but that depends on your lifestyle and what you want to change.

Answer 5

Fannie Mae guidelines state that unless you have previous documented landlord history you will have to qualify with both theentire existing housing payment and your new proposed housing payment as a part of your debt picture. That may impact your qualifying ability.

In addition, at 95% the P&I payment on 95% of $380,000 is $2222,74 so if you add taxes, insurance, and private mortgage insurance or a 2nd mortgage payment if you elect to go with an 80/20 combination, the payment will be well in excess of your $2000 benchmark on a fully amortized loan.

Answer 6

If renting the house would not cover the mortgage payment then don't sell or rent the house. Buy a fixer-uper using a second mortgage on your house and rent that out because now is not the time to flip it. Right now is a good time to buy but it's not a good time to sell. So while your'e waiting for times to get better invest in a fixer-uper, pull a bunch of guys together and gut it and make it nice. Rent it out for a while to someone who won't mess it up for you if you have to.

Sure people are trying to sell the homes that have been foreclosed on (maybe your second option is to buy a home that has been foreclosed on) but that home had doubled in price in the last few years so the price may not come down as well as you'd like, or what you'd call reasonable, or what you could get a good deal on.

I suggest you take your questions to a real estate agent in your area and just see what they present to you (you don't have to agree with everything, just listen).

real estate agent

Answer 7

Are you kidding me Marty D..... that's the worse advise I have ever heard. A 40 year mortgage does not make that much of a difference in the payment and you're gonna bury the guy. I'm not even trying to get the deal.

You need to have a signed lease to offset as much as the liability as you can. See if you ratio. Yes, a lot depends on credit profile and DTI, but you have many options for your new home purchase. Marty D is a perfect example of a "Broker" looking out for himself and screwing customers.

Be careful..... be very careful.... it's your money and equity.

Answer 8

I have some other ideas for you.

You could refi the current home into an option arm which would give you the flexability of various monthly payments such as 1-3% payment, fully amortized interest only, 40 years option or straight 30 year fixed rate.

You can get a 95% Option Arm on the new home purchase as well and have plenty of options of payment types.

If your interested in learning about investor loans you can visit http://www.fivestarsmortgage.com/investor-loan/. Just email or call the number if you need more information