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Replies (11)
- Cherlann
- Contributions:13
The problem that you will have is...since you plan to hold onto your current home, you will have qualify for both loans. Meaning your income will have to be enough to make both payments. Also depending on the underwriter and when you purchased your current home you may have to do the new home as a 2nd home. Even if you rent it, some lenders will still count the payment against you.
- Jacqueline Kounkel, "Wells Fargo Banker"
- Contributions:114
Hi Broadview Heights!
I feel that you are very strong clients and based on the information that you have provided, I see no reason to believe that you would not qualify.
If you do choose to rent out your departure residence, keep in mind that you will get some rental credit but not 100% of the rental income will be calculated into your debt to income ratios. The amount of credit on the departure residence is based on the Loan to Value first and foremost. So if your home is more than 80% borrowed against the value, there is a possibility that the lender will not allow any of your rental income to qualify. In this situation you would need to qualify for both payments on both homes in entirety. If it decided that the Home Valuation on the departure residence is 80% or less, you would (in most situations) be allowed to used 60 to 70% of the net rental income to qualify against your debt to income ratio.
The best thing to do would be to contact your banker or lender and ask them to run the scenario both ways and see if you qualify and what scenario you are comfortable with.
Best of luck!
I feel that you are very strong clients and based on the information that you have provided, I see no reason to believe that you would not qualify.
If you do choose to rent out your departure residence, keep in mind that you will get some rental credit but not 100% of the rental income will be calculated into your debt to income ratios. The amount of credit on the departure residence is based on the Loan to Value first and foremost. So if your home is more than 80% borrowed against the value, there is a possibility that the lender will not allow any of your rental income to qualify. In this situation you would need to qualify for both payments on both homes in entirety. If it decided that the Home Valuation on the departure residence is 80% or less, you would (in most situations) be allowed to used 60 to 70% of the net rental income to qualify against your debt to income ratio.
The best thing to do would be to contact your banker or lender and ask them to run the scenario both ways and see if you qualify and what scenario you are comfortable with.
Best of luck!
- Larry Jacobson, "Clearpoint"
- Contributions:1214
Cherlann you scare me! Why would the time they purchased the home have anything to do with being classified as a second home purchase. Do you do a lot of second home purchases in the same area they currently live??? How long would I have to live in my current home before I could buy another down the street as a second home????????
Keymax, contact a lender in your area and go over the scenario, they can calculate your total debt obligation and set you on the right path.
Keymax, contact a lender in your area and go over the scenario, they can calculate your total debt obligation and set you on the right path.
- Paul Warkow, "smokey1999"
- Contributions:47
As long as your income, which would include your wages and about 70% of the rental income you will receive are about double the payments on your old mortgage, new house mortgage, taxes and insurance plus your other monthly debts, you should be able to qualify.
Keep in mind that you must convince the underwriter that you will actually move into the new home rather than live in your current home and use your new purchase as an investment property. Factors such as the fact the new purchase is bigger, better, etc will help. Underwriters are skeptical of this scenario because one of the biggest areas of mortgage fraud are people claiming they are applying for a mortgage on a primary residence when they have no intention of living there. Just be prepared for some resistance.
Keep in mind that you must convince the underwriter that you will actually move into the new home rather than live in your current home and use your new purchase as an investment property. Factors such as the fact the new purchase is bigger, better, etc will help. Underwriters are skeptical of this scenario because one of the biggest areas of mortgage fraud are people claiming they are applying for a mortgage on a primary residence when they have no intention of living there. Just be prepared for some resistance.
- Cherlann
- Contributions:13
Larry...I was referring to them doing it as a primary residence. If they are keeping the current property then they will have an issue of doing the new loan as a primary.Since mortgage insurance companies will only insure 1 primary home within 12 months. But as long as they put down 20% as they stated then that shouldn't will not be an issue.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
Besides your closing costs and down payment, you'll need 6 months PITI & HOA Dues in verified reserves. You will also need 2 months PITI in reserves on your purchase.
Your current housing expense and your new PITI will be counted in your debt-to-income. Maximum DTI is 45% that may go to 50% with a "strong file." I don't believe your remaining assets will qualify for a "strong file." To count 75% of rent as income on your condo you need 30% in equity..... Good luck!
Your current housing expense and your new PITI will be counted in your debt-to-income. Maximum DTI is 45% that may go to 50% with a "strong file." I don't believe your remaining assets will qualify for a "strong file." To count 75% of rent as income on your condo you need 30% in equity..... Good luck!
- Larry Jacobson, "Clearpoint"
- Contributions:1214
Cherlann give yourself some more thumbs up..
I still don't see why you told them an underwriter would allow them to purchase it as a second home???? They can't have a primary and a secondary in the same place.
I still don't see why you told them an underwriter would allow them to purchase it as a second home???? They can't have a primary and a secondary in the same place.
- Cherlann
- Contributions:13
Larry...maybe you're reading into this way more than I am...but i didnt see anywhere in there where they said they are buying a home on the same street?? I guess you know them personally...
I'm new to this whole Zillow thing...but is this how it works...we all try to out wit out smart and out talk each other??
Kaymax depending on how the underwriter looks at your vacant home will determine how they will classify your new property. But either way you will have to qualify with both payments. Sorry for the confusion.
I'm new to this whole Zillow thing...but is this how it works...we all try to out wit out smart and out talk each other??
Kaymax depending on how the underwriter looks at your vacant home will determine how they will classify your new property. But either way you will have to qualify with both payments. Sorry for the confusion.
- mbs30
- Contributions:3
We DO intend to live in the newly purchased home and make it the the primary residence.
I did not get the lender to run any numbers. I actually ran the numbers myself. I took my "net" salary per month (both my wife and myself) - deducted all our expenses. This includes all our basic utilities - gas, electric, water/sewer. Personal amenities - internet, cable. Budgeted food and gas. Then monthly obligations - daycare expenses, auto payment/insurance, debt payments (triple the minimum payments). Finally both mortgages and home insurances. And still have a few hundred left for our pockets per month. The net salary still allowed me to deduct our retirement (401K, IRA, 529) as well as health insurance premiums, and monthly obligations for the 401K loan.
This made more sense to me than doing a DTI based on the gross.
Our monthly gross is $12.5K.
I think the best path is still to sell the existing house. I've made a few updates that I don't think I'll recover selling in this market.
I've submitted a loan application recently and qualified for the lowest rate at 4.75% at the time. So I guess I'll wait for the underwriters and see.
What I don't understand is why I would need PITI of 6 months reserves? Do lenders/banks want these in liquid assets? Why would they deny me a loan if I have all my money in stocks/mutual funds/and bonds. I hate so called savings account, they earn LITTLE TO NO MONEY, its like watching paint dry. The same with MMA.
I did not get the lender to run any numbers. I actually ran the numbers myself. I took my "net" salary per month (both my wife and myself) - deducted all our expenses. This includes all our basic utilities - gas, electric, water/sewer. Personal amenities - internet, cable. Budgeted food and gas. Then monthly obligations - daycare expenses, auto payment/insurance, debt payments (triple the minimum payments). Finally both mortgages and home insurances. And still have a few hundred left for our pockets per month. The net salary still allowed me to deduct our retirement (401K, IRA, 529) as well as health insurance premiums, and monthly obligations for the 401K loan.
This made more sense to me than doing a DTI based on the gross.
Our monthly gross is $12.5K.
I think the best path is still to sell the existing house. I've made a few updates that I don't think I'll recover selling in this market.
I've submitted a loan application recently and qualified for the lowest rate at 4.75% at the time. So I guess I'll wait for the underwriters and see.
What I don't understand is why I would need PITI of 6 months reserves? Do lenders/banks want these in liquid assets? Why would they deny me a loan if I have all my money in stocks/mutual funds/and bonds. I hate so called savings account, they earn LITTLE TO NO MONEY, its like watching paint dry. The same with MMA.
- Anthony Ebright, "anthonyebright"
- Contributions:15
keymax,
Wow! You certainly are detailed! Nice work!
I'm going to attempt to answer your second set of questions:
1. Many lenders ask for 6 months reserves to ensure you can continue to make your mortgage payment if something should happen with your income.
2. You can have your liquid assets in stocks, mutual funds and bonds. These items are easily "liquidated" for cash. You don't have to have the cash in a savings account.
Hope this helps.
Wow! You certainly are detailed! Nice work!
I'm going to attempt to answer your second set of questions:
1. Many lenders ask for 6 months reserves to ensure you can continue to make your mortgage payment if something should happen with your income.
2. You can have your liquid assets in stocks, mutual funds and bonds. These items are easily "liquidated" for cash. You don't have to have the cash in a savings account.
Hope this helps.
- NeedinFHA
- Contributions:122
My view is a dream home is a dream, chase it and it will get the better of you...I'd look around a little more till you decide what you want to do :)
Will I have a problem getting a loan?
Make 140K gross together. We would like to to purchase a home thats 260K and put 20% down.
So the loan amount be around 208K. Our down payment will be a mixture of liquidated assets(stocks/small savings), cash gifts, and 401k loan. We currently own our starter home and have 90K left. The home is valued at 108K
We plan to sell this home after the purchase. We are holding out because of the abundant amount of similar homes for sale. We are also considering renting this. We have some debt about 10K, on a HELOC and CC.
We have found our dream home and don't want to miss the opportunity.
What are your expert thoughts?
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