Renting Currenthome And Buying New?
Hi. I am in the middle of purchasing a new home and had originally planned to sell the townhome/condo that I live in now. In talking with my realtor I realized that I could rent my home for just under $2000/month (1500-1800) and right now my mtg/taxes/condo fee total only $1300/month. So I am starting to think that it would be silly of me to sell my current home. I owe 162K and it's worth 195K.
Right now I have an FHA ARM and a small home equity line on the first house. If I were to refi them together I would be at roughly 85%, so not quite enough to drop PMI, but I could lower the overall month and get into a fixed rate with a re-fi, and still do it as an owner occupied residence if I move now.
It is a condo so there is no exterior maintenece, my husband is handy with repairs and the home is only 3yo. We are moving 5 miles up the road.
Does this make semse or should I just sell?
Thanks for your help
Julie :-?
As long as you are willing to properly manage the rental (or hire a management company); I think renting out the unit is a great way to go.
However I'd suggest that you carefully (as I believe you already have) consider refinancing to a fized rate loan while you are living there - once you move you will be NOO (non-owner occupied) and subject to a significantly higher interest rate. Since you are there now; if you can lock-in a favorable rate fixed loan it will simplyify your finances.
You could refi into an interest-only loan which will increase your cash-flow. I doub't that you are going to get as good of an interest rate as what you have on the fha arm. Another question to ask is how much do you think your condo would appreciate if you held if for another couple of years? Side question. Is your condo currently listed with the realtor? If it is you may have some issues refiing it.
Yes it is listed, however the broker I talked to works with my realtors company and I told him exactly what I was doing and he was apparently willing to develop amnesia.
Yes it is listed, however the broker I talked to works with my realtors company and I told him exactly what I was doing and he was apparently willing to develop amnesia.
If the lender finds it in MLS though it will have to be removed and seasoned for 60 days in some cases. I know that I have done loans for people who's houses are on the market and just because they are in the MLS service the lender will make them wait.
Not all lenders do this but some will so be prepared.
[addsig]
Couple of questions and thoughts:
Are you taking another FHA loan? If not, are you checking into streamline refi. w/FHA? Might be cheaper. Can't drop MIP on an FHA anyway.
What is your goal/intent for keeping the property? Hope of further appreciation? Cash-flow? Estate Plan keep for long term?
Have you owned it over 2 years as your principle residence? If so, you want to look at the fact that you can sell it now or up to 2.5 years and still take the tax break for the difference between purchase and sale. Be sure to look at those rules to decide your strategy.
--If one wants to be a landlord, it is easier to convert an OO to a NOO than to buy NOO.