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2nd home, rental, or stay put

homeowner with 100k mortgage (6.875%)with around 150k equity (1994 home)...debt to income ratio= 20%...annual inc = 120k...ficos high 700 to low 800...planning to upgrade to a newer 2nd home (275-325k) to live in (make the former as a rental?)...is this viable???should we refinance first...whats the worst/best  case scenarios...we r excellent savers/good investors...45 and 47 years of age ...need advise...thank you
  • July 13 2009 - Redlands
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Answers (2)

I am working with clients right now doing the same thing. Deciding what to do can be difficult. It's a buyer market right now and lots of great deals are available. If you need cash for your downpayment on the new home then refinancing and using some of your equity is one way to go. You will need to qualify for both mortgages when you go to purchase so having the same broker do both loans would be smart. That broker should be willing to discount fees if he/she is doing both loans for more savings. On the deal I am working on they only ask for rental agreement but it wasn't used to offset income. You will need to quailfy as I said for both payments.Good Luck let me know if you have any more questions.
  • July 13 2009
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It's a great time to buy right now, if you don't need the cash for the new purchase I wouldn't advise refinancing - just depends on your particular financial situation - but would agree with the purchase as you may be able to find a really great deal on your new home.  Hope this helps!
  • July 13 2009
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