Financing in Austin>Question Details

Forrest, Home Buyer in Austin, TX

How difficult is it to get loan to buy 2nd home?

Asked by Forrest, Austin, TX Wed Sep 5, 2012

I bought my first house in Central Austin 2 years ago. It's currently valued at 220,000 and I owe approx 190,000. It's a 15 year mortgage and the monthly payment is 1,860 total with taxes, insurance, etc. I make 80K per year and have excellent credit and no debt besides car payment and mortgage. How difficult would it be for me to get a mortgage to buy a 2nd home for 200K - 300K? I have heard that it will be difficult if I don't plan to live in the 2nd home myself so I would be willing to move into it and then rent out my existing home to a long term renter. Would I even qualify for a 2nd mortgage? If so, what % down payment would I need to supply?

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Hello Forrest,

If you want to get the best interest rate and avoid any loan fraud issues you would have to move into and live in the home for at least a year as you have mentioned. To qualify you would initially have to have income that would support both mortgages but as long as your credit and debt ratio's are in line you would be able to accomplish your objective.

I am a mortgage broker and Realtor so if you would like to discuss either aspect of the transaction you are considering please do give me a call or email me any additional questions you may have.

Best of luck to you.

_______________________________________
Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
Web Reference: http://www.AustinListed.com
0 votes Thank Flag Link Thu Sep 6, 2012
Forrest,
From.what you posted it seems getting a second home loan is very attainable.
Contact me directly for further assistance.
Bill
0 votes Thank Flag Link Thu Sep 6, 2012
Forrest, I have a couple of great lenders I can connect you with that can analyze your specific situation and let you know exactly what you qualify for. Also, they will do this for you at no charge. Feel free to contact me and I will steer you in the right direction.

Also, if it does work out where you can qualify, which I believe you would, I would be happy to help you find just the right second property to purchase. I represent buyers like you at no cost to you, and am one of the top rated agents in Austin.

Thanks, Joe Jarusinsky, Keller Williams Realty, 512-261-4415
0 votes Thank Flag Link Thu Sep 6, 2012
You will need to rent out your property first. So, the lender can use seventy five percent of rental income for the current residence. Regarding to a down payment if you can do minimum twenty five percent down, it will certainly make easy for you to qualify.

Good Luck,

Maria Cipollone
0 votes Thank Flag Link Thu Sep 6, 2012
Great answer by Barbara. One point I'd add, which may be fairly obvious: To count the 75% of rental income for the current residence, you actually need it leased. Otherwise, you need to qualify based on debt/income ratios covering payments for the current home and the new home. If you go the other direction and consider the 2nd purchase an investment, your down payment options are more limited. I have a client who recently purchased an investment property with a required 25% down - excellent credit, great income, etc.

Good luck!
Web Reference: http://www.crowehomes.com
0 votes Thank Flag Link Thu Sep 6, 2012
Here is the way a loan officer would analyze this. If you want to purchase a 2nd home in a resort area, away from your primary residence, we would be counting both payments in your ratios. Your $6,666 monthly gross, with $2,360 in house payment and car payment, is at a DTI ratoi of 35% already. Lenders usually stop at a 45% ratio, so that definitely does not leave you room for a house payment on $200K-$300K property.

Moving to a new primary residence in the same area and price range as your current home, while turning the first one into a rental has also become more difficult.

"When a primary residence has been converted to an investment property
We will use 75% of gross rental income as stated on the lease as evidence of rental income or to offset the payment when the property is not listed on the Schedule E because it was converted subsequent to filing the tax return if the following conditions are met:
• There must be documented equity of at least 30% in the existing property from at least a 2055 exterior-only inspection, dated no more than 60 days from the Note Date.
• The rental income must be documented with a copy of the fully executed lease agreement and
• This method of calculating income is not allowable for Freddie Mac transactions unless the
borrower has a 2 year history of rental income."

In other words, times have changed, and it isn't as easy to just provide a lease agreement and go on down the road.

I definitely suggest you confer with a seasoned, licensed mortgage loan officer. He/she should know the rules.

Barbara Coker
NMLS#228545
Licensed Mortgage Loan Officer
100% Home Loans All Over Texas!
Web Reference: http://www.thecokerteam.com
0 votes Thank Flag Link Thu Sep 6, 2012
Forrest,

Owner occupy is definitely going to provide you the best terms. Having said that, there are second home/investment property loans available.

Please feel free to contact me, and I would be happy to do rental analysis and price analysis on any home. Plus, I would be happy to refer you to some great lenders with great rates.

Please feel free to contact me anytime.

Steve Nusinow
(512)922-7588
0 votes Thank Flag Link Thu Sep 6, 2012
Buying a 2nd home, or an investment propert is done frequently in Auastin. Shoot me an email and I will forward a couple reputable options for local mortgage brokers that can show you all the options as rates and programs vary amongst lenders. You can reach me at 513-299-3809 or israel@austinhomeshop.com
0 votes Thank Flag Link Wed Sep 5, 2012
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