Debt To Income Ratio
I am tring to buy a house to rehab. I am using a mortage broker to obtain a loan. I own the house i live in and I own a rental unit. The property I am attempting to buy needs some rehab. I was going to obtain a 2nd mortage on my property i live in to do the repairs to the new property. After doing the repairs I was going to payoff the 2nd mortgage when I sold the home and us my profit to buy and fix another house.
The problem is with the 2nd mortgage I will not be in my debt to income ratio. My broker says I sould refinance my house for 30 years at a lower percentage rate. At closing pull out my money for repairs. Lucky I have about $50,000.00 equity in this property. This will lower my payment over $100.00, But it will have me owing 10 more years on my house. The broker said the lower rate will save me around $24,000.00 in interest. He said I could still pay the same payment and pay off around 20 years.
My question is : Does this sound like a good idea? :-? [ Edited by gfpd311 on Date 07/10/2004 ]
I'm not a mortgage broker but I do know there are products available that will assist you. Keep looking around!
I prefer to use lines of credit because you can manipulate your debt to income ratio (use line, pay it off, use line, pay it off....)
Go thru your financials and see how much you can get out via HELOCs (home equity line of credit).
Also, not sure how comfortable you are with this idea, BUT you can take a 60 day loan against a retirement account. If you're confident you can put the $ back (roll it back into the retirement account) within 60 calendar days, that's a good idea. I've used my retirement account as a bridge loan for a few years now WITHOUT creating a taxable event.