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Profile picture for kseanng

Better home

Hello everyone, 

I have a mortgage loan question.  I currently have a townhouse that i own with a loan and i would like to buy another house.  According to my loan officer i can only qualify for 100k home loan, i would like to buy a more expensive house.  Would I be able to get a higher loan if i got a interest only loan.  I would like to get a house for at least 120k ideally 150k.

thanks,

  • July 28 2014 - Grand Prairie
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Answers (4)

Profile picture for kseanng
Thanks everyone i appreciate the response.
  • July 28 2014
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Don't do interest only.  I'm not even sure that is still offered.  They probably still calculate repayment in your debt ratios so I don't think it would help even if it were available.

Do you need to sell the current home to qualify for more?   Did they talk to you about this?  Do you have equity in the townhome?
  • July 28 2014
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Profile picture for CA Direct Lending
If you have at least 30% equity in the townhouse that you own and want to convert it to a rental, you can use the new rental income to qualify and help offset that debt.  If you do not have 30% equity in the townhouse, you can still use the new rental income to qualify through another lender we have who will allow this.

In most cases, qualifying for an interest-only loan, the best-case scenario qualifying rate would be at or near what a 30-year fixed rate would be even though your actual monthly payments would be much lower.

For us, if you choose an interest-only loan, we don't have a lender in either case who will allow the new rental income unless you already have a history of receiving rental income.

I hope this makes sense!
  • July 28 2014
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Profile picture for shapiroamg

Qualifying for an IO loan will probably qualify you for less mortgage these days. Years ago we could use the IO payment but now we typically use the first payment assuming the loan is in the P&I period.

  • July 28 2014
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