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Purchasing second home as principal. Current home statut when applying for new loan question.

Hi,
we plan on purchasing a new house to use as a principal residence and convert our current one as an investment and rent it out a couple years until we can sell (we are slightly upside down on it)

My question now is what need to be the statut of our current house when we apply for the new loan on the new house? It is a short sale and we should have a closing date any time now.We cant move from your house until we have the short sale approval and if/when we have it we will only have like 30days to close so I'm afraid I wont have time to find tenants for our home. Will that cause problem at underwriting?
Or can I just list it for sale at full price?

Any advices?

We really want this new home and I want to make sure we satisfy the underwrititing requirements

I'm also aware we have to qualify with both mortgages, need to have 6months PITI reserves for each houses ets..
We are already pre-approved,conventional loan with 20% down.

Thanks!
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November 18 2012 - US
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Answers (5)

Best Answer
Unfortunately, the only one that can answer your concern is the lender doing your loan.  The U/W condition would clearly spell out the the requirements for retaining your current home. If a lease is required to be in place that would not be a common requirement if loan approval is based on you being qualified to carry both payments and 6 months reserves for both properties..  Worse case may be to provide copy of an agreement with Realtor to list the property for lease since that is your intention.
However, since that is the basis for your concern it is time for you to find out exactly how the Underwriting condition reads.....
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November 19 2012
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I see, that clarifies quite a bit,thanks a lot!
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November 19 2012
Profile picture for gabrielh
Thanks for your reply. I'm confident we wont have any troubles finding tenants but probably not by the time we apply/close on the loan on the new house so that's why I was wondering what are the underwriting guidelines for ppl purchasing a new home and keeping the existing one (again, conventional loan, 20% down, 760+ credit score, never missed a single payment) because I read that banks are becoming weary of ppl who "buy and bail".

Asking here because I'm getting different answers from different lenders and I dont want any surprises at underwriting.

(I dont trust the mortgage officers..for ex I had no trouble getting pre-approved but NO ONE told me I needed 6months PITI reserve after closing since we are keeping existing home.
Good thing I did my researches! )
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November 18 2012
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Thanks for your reply. I'm confident we wont have any troubles finding tenants but probably not by the time we apply/close on the loan on the new house so that's why I was wondering what are the underwriting guidelines for ppl purchasing a new home and keeping the existing one (again, conventional loan, 20% down, 760+ credit score, never missed a single payment) because I read that banks are becoming weary of ppl who "buy and bail".
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November 18 2012
Most of the time if your income and income history qualifies you for two mortgages.(the current one and the new one) you are substantial good to go. If you got behind on the other mortgage that would be a red flag. Being upset down is always awkward, but if you can rent it at or near your monthly payments that is good. Finding and securing good tenants will ease the situation some and you will get to enjoy your new place.
With all that rambling...........if your income justifies owning both properties at the same time and you are comfortable with it, then go for it. Start a reserve account for repairs on both properties and make sure you get a Home Warranty on the new place and maybe put one in place on the current one.

Good Luck
James Callas Realtor
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November 18 2012
 
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