I`m planning to use my first house as rental property and use my next purchase as a primary residence, how can that mortgage affect my next purchase.....
2007-06-18 13:04:58 · 6 answers · asked by Sailing Man 1 in Business & Finance ➔ Renting & Real Estate
If you can show that the house is being rented out, and that it is enough to cover your current mortgage payment, you will be fine.
That mortgage will do nothing but help build your credit and show that you make mortgage payments on time!!!
The only thing that will come in to play is to make sure you have enough income to cover two mortgage payments (75% of your rental income can be used as income) So hopefully there will be no problems.
Email me if you have any further questions.
2007-06-18 17:33:17 · answer #1 · answered by Anonymous · 0⤊ 0⤋
From personal experience, if you've been renting the house out for at least 6 months and have a tenant with a lease OR have 6 months worth of mortgage payments in the bank on the rental home (in addition to any down payment and closing costs on the new place), lenders will treat the rental and its income and mortgage payment as a wash as long as the rent is enough to cover (or very nearly cover) the mortgage payment. It generally won't affect your debt to income ratio.
I'm out of the landlord biz now, but when I bought my current home, I had 4 rentals all with leases and long term tenants. I had a small positive cash flow. The 4 lenders that I considered ALL treated the rentals as a wash and didn't include this in my debt-to-income ratio. The exact same thing happened as I was accumulating the rental portfolio and in the market for a new primary residence. These were all tier one lenders such as BofA, Ditech (GMAC), USAA Federal Savings, etc.
2007-06-18 13:31:03 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
It will affect your debt to income ratios.
If its a rental, a lender can only use 75% of the rental proceeds as income.
If your debt ratios are good, if may not affect you at all.
2007-06-18 13:08:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
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2016-10-17 23:15:15 · answer #4 · answered by ? 4 · 0⤊ 0⤋
My dad used his house to buy a second house. They own the second home free and clear, but should they stop paying on the loan he loses the first home. I don't know for sure how he set it up.
2007-06-18 13:10:57 · answer #5 · answered by januaryman169 2 · 0⤊ 0⤋
it has a lot to do with debt to income ratio
2007-06-18 13:06:54 · answer #6 · answered by texasbluezman 2 · 0⤊ 0⤋