How will renting versus selling my current home affect getting approved for another mortgage?
Will try to make a long story short here . . .
My husband is AF and we’re getting sent to another base sometime by the end of the year. We purchased our first home here knowing it would be a short assignment, planning on renting it out after we moved. We’ve been waffling now on renting out versus selling our current home, after seeing some rental houses on our block sit vacant or have what looked like skips/evictions.
When I tried to get preapproved for a mortgage for our next home they said it would need to be contingent on the sale of our current home. At the time we were focused on selling, but since then we’re back to wanting to rent our home. However, I don’t know if we’ll be able to get approved for our next mortgage if we don’t sell this home. Anyone able to give me some guidance on this?
Also, we’d like to have a temporary living situation in our new place so we can have time for me to get a job, and for us to learn the area and not be rushed to find the house that we are going to raise our future family in. Renting, however, is a major issue simply because we have a large number of pets and we really don’t want to break up our furry family (2 dogs, 5 cats). One of the options I am looking into is purchasing a less expensive condo (I’ve found a few that initially look nice in the 65-75k range) to live in for a year or so and then rent out after we’ve found our dream house. If we had TWO mortgages that were rental properties, would that totally kill our chances of getting approved for our forever home? Am I being completely unrealistic in thinking we could pull this off? We’ve got enough in savings, stocks and mutual funds that we could afford three mortgage payments if need be in times of vacancies, but I don’t really know if we’d be getting ourselves in over our head. Anyone with advice or experience in these matters, we’d really appreciate any input!!
We have a conventional 30 yr fixed on our current house but we’re interested in having a VA on our next home. I don’t know too much about the nuances of the VA loan other than you can’t rent out a VA house- does this make a difference? In particular- are VA loans stricter in their requirements for qualification?
January 29th, 2009 at 8:50 pm
Renting gives you another source of income.
That’s a +
February 1st, 2009 at 1:43 pm
In todays appartment if I were to be moving I’d probably try to rent out my home first. My boyfriend and I are JUST buying a condo (closing date is on oct 9th)… we’ve talked about what we’re going to do when the time comes for us to move and we both agree that we’ll try renting first….
HOWEVER, with the way the economy is…I’d **** to risk renting a place out and having no renters & get stuck with that payment…especially with the unemployment rate going up and all that FUN stuff.
As far as being able to get the mortgage, it would all depend on what your debt to income ratio is. And I myself do not know how to figure that out. It wouldnt hurt to call a mortgage lender and chit-chat about numbers.
To be on the safe side, maybe reconsider selling this one?
February 4th, 2009 at 3:15 am
Real estate varies by state, but for the most part things are the same, in MI the law was just changed , it ust to be you could offset your current mortgage by rental income and then you were able to qualify for a new mortgage, however with the recent disasters in the housing marketing laws have changed, in order to quaulfy for a second mortgage using a rental property you must
“Up to 75% of the rental income may to be used to offset the mortgage payment in qualifying if there is documented equity of at least 30 percent in the existing property. Valuation can be derived from an appraisal. Valuation is subject to underwriter approval.
The rental income must be documented with both of the following:
· a copy of the fully executed lease agreement; and
· the receipt of a security deposit from the tenant and deposit into the borrower’s account.
If the 30 percent equity in the property cannot be documented, rental income may not be used to offset the mortgage payment.
· Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction; and
· Six (6) months of PITI (house payment) for both properties is required to be in reserves”
If you meet these requirments you should be good to go.
February 4th, 2009 at 6:56 am
The short story; As l see it your going to have to keep your current place until the market improves enough that the selling price, at a minimum, gets you out of that mortgage and/or replaces what you took out of savings for your move.
Renting is probably better then letting the place sit idle but being a long distance landlord opens up issues also. The rental income will help with that mortgage payment but there is no guarantee that you will always have a renter at the price you want.
l can’t imagine any condo association permitting you to keep 7 animals on community property. Few landlords will take that even with a pet deposit. A condo might not be your best choice. Your going to have to invest time into finding a new place that will accommodate that many pets plus people. You might need the services of a rental agent. A house gives you more options but is it in your budget & does the town permit such numbers of pets?
You can do this. The question is do you want to?
Good Luck.
February 7th, 2009 at 1:10 pm
Is your current loan VA? Are you planning on using VA for next home? Better check with a mortgage professional before you make a decision.