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Can I rent my underwater home and get a mortage for a new one?

Profile picture for Ealvara2
First Mortage: 219K @ 6.25% obtained in 2005 Second Mortgage: 30K @ 8.1% obtained in 2007 Tax/Ins: 2500/yr Current Value: 150K Monthly payment with tax/ins: $1,850 My home is seriously underwater and we have tried to get the bank to do a refi or qualify for any of the federal programs, with no success. My credit is excellent and currently even own a townhome which is rented and making about $300 in profit. I started thinking about renting my primary residence, which I would hope to rent for $1,500-2,000/month. I would like to know if that idea will be a good one and would a bank be able to provide a new mortgage towards a new home? The goal is to buy time to refinance the underwater home or short sale. If the bank refuses to work something out, then I could consider foreclosing, but not until I secure a new home.
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February 04 - Brandon
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Profile picture for MortgagePlannerMike
You will need to qualify for both mortgage (along with taxes and insurance) payments (without consideration of the rent on your current residence).  This policy has been in place to reduce the "Buy and Bail" practices that took place after the Real Estate Market started to tank.  Maybe the new HARP program will help you out.  It should be due March 17.  Do you know if you have a Fannie Mae or Freddie Mac loan?  Essentially, the new HARP program will eliminate the need for value, so it won't matter how underwater your property may be.  You can go to www.makinghomeaffordable.gov to view more information and there are links to both Fannie Mae and Freddie Mac loan look ups.  Good luck!
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February 04
Profile picture for Ealvara2
The loan is a Freddie Mac. I have already contacted the makinghouseaffordable.gov via telephone, but they said currently I do not qualify for the current programs, since the house is over the required % for a refinance. The bank has advised to wait as you indicated until after mid-march to see if the HARP program would work. I have also, started reviewing about a short refi, but what I am reading seems not too hopeful. Are there any other options available? Thank you so much for replying!
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February 04
Profile picture for DiamondFundingCorp

You can purchase when a current investment or vacated primary residence is upside down.

Underwriters are looking at these loans very closely even if you make enough income to carry the two (or three) mortgages.  They will probably ask what is the "event" that is causing you to consider purchasing a new home:  marriage, birth of child, divorce, relocation, etc.

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February 11
 
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DiscussionCan I rent my underwater home and get a mortage for a new one?
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