My partner has a house under her name, though her mother pays the mortgage and for all intents and purposes owns the house. The mortgage and deed are under my partner's name however.
When we apply to buy a home together, this being my first home, what effect will that other house have on us financially? Specifically, will a lender penalize us because of the other house? Will this affect the rate we get? Will this affect the amount of credit offered to us?
Assume we are married, the other house is legally separate property, acquired before marriage, and being paid with separate property funds.
Also, what effect would it have if the first house has a mortgage balance that exceeds the current appraisal value?
2007-12-17 09:54:58 · 3 answers · asked by Joe T 1 in Business & Finance ➔ Renting & Real Estate
Details I forgot. The "second" home would be owner occupied (by myself and my wife). I don't know if we could get the mother-in-law to sign a rental agreement, because she has her own house that she occupies. We could get proof to a prospective lender that the mother in law regularly pays the mortgage out of her own checking account. Is that helpful?
The problem home is an investment property that she bought under her daughter's name.
The answers so far have been very helpful. Thank you to everyone who has contributed so far.
2007-12-17 11:27:29 · update #1
It will definately effect the new mortgage.
Will your mother-in-law to be sign a lease? That would be helpful so the lender can see that you are renting the property.
The first mortgage balance exceeding appraisal value should not effect your new mortgage. The lender will look at your monthly obligations, that mortgage being one of them.
However, the other issue is that you may not be able to qualify for the best rates if the home is not going to be owner occupied. You don't say if this second home is an investment purchase or your home. It is an important distinction with some lenders, and you could pay higher interest rates.
2007-12-17 11:18:18 · answer #1 · answered by godged 7 · 0⤊ 0⤋
If your partner has a house and a mortgage under her name it will definitely affect things when you go to purchase a house with her. That is a "debt" that is going to count against her debt to income ratio. She is ultimately responsible for that house, whether her mom makes the payments or not, so the lender on the house for the 2 of you is going to take that into consideration.
2007-12-17 18:01:32 · answer #2 · answered by HEATHER 6 · 0⤊ 1⤋
The current home will have a great effect on your purchase of another home. Since you will be using her income in the purchase of the new home.
However if you do get someone to rent the other home and have that contract in hand when you go to the lender it will make a hugh difference.
2007-12-17 18:00:57 · answer #3 · answered by Big Deal Maker 7 · 0⤊ 1⤋