Thinking About Renting Current Home And Buying New
Hi. Iam 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 and right now my mtg/taxes/condo fee total only $1400/month. So I am starting to think that it would be silly of me to sell my current home.
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.
I just really have no idea about how it would work to finance this whole thing. Would I be able to count the "potential rent" as income? I was planning on 100% financing my new home. How hard is financing on an additional home in this scenario?
Thanks for your help
Julie :-?
I know I'll be corrected, but I blieve you can take 75% of the 2000 as income, (or $1500). What I don't know is if they count it before it's rented or not.
I would talk to the lender of your new property.
Will you have a downpayment for the next property?
The new property is being built. I have ~$7500 down on it now, and the one lender I am working with was going to do 100% financing for me. I am willing to go that way because I am getting in at the end of the first phase of the development, and they are planning a good $20,000 price hike in the spring (there are over 100 more homes to be built there)
So if I can get a lease agreement signed prior to closing, at 75% that should be enough to cover my current mtg, and not affect me debt to income ratio...is that correct thinking?
If you already have the downpayment and are expecting a great appreciation on the new property, you can also consider an interest only loan on the new property.
If you're well diciplined, you can still make principal payments on the interest only loan and sometimes make better progress. If you find you don't have a renter for a few months, then you don't have to make you're principle payment and that frees up a little money.
I am also a "newbie" who has been reading quite a bit so please take these ideas and pass them by someone a little bit more knowlegded.
tom.