Financing in 75214>Question Details

Marc R, Home Buyer in 75214

2nd Home question - Reserves

Asked by Marc R, 75214 Fri Oct 21, 2011

What is the requirement on buying a second home? I want to lease the first home. What does the bank require in reserves? 2 months per house? 6 months?

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Not relocating. just moving ... tired of condo life and ready for house.
I dont have that much equity in the condo. 10k out 185k
But my question is that my condo is FHA do I need reserves on it??
0 votes Thank Flag Link Fri Oct 21, 2011
Just moving... going to condo to house.
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John B.
My current loan is FHA but my next loan will have to be conventional.

Thanks for the info.
0 votes Thank Flag Link Fri Oct 21, 2011
If you have a 20% down payment on the new home, and do not need the rental income from the home you are vacating to qualify, then you only need the amount of reserves that Fannie Mae's automated underwriting system calls for - not the 6 months PITI for both the new + existing property. I am helping someone in a similar situation move from downtown Chicago out to the suburbs, they don't have 30% equity in their home they are vacating, are putting 20% down on the new purchase, and they actually don't even need ANY reserves to qualify. Now if they were putting down less than 20%, private mortgage insurance (PMI) would have been required and then like John Burke says, we would have needed the 6 months PITI in reserves for both the new + existing property.

In Texas you can do what are called "combo" loans, which is where you get a 1st mortgage for 80% of the home's value and a 2nd mortgage for 90% or even 95% of the home's value, therefore allowing you to bring in only a 5% or 10% down payment and getting to avoid having to deal with PMI company guidelines. In other states you can do the combo loans too, but most are limited to a total loan amount of 80% of the purchase price, Texans have a big advantage in that department since your home values didn't sink as much as the rest of the country. That would potentially allow you to put down less than 20%, use conventional financing, and be able to get around the 6 months PITI reserves requirement for both homes.
0 votes Thank Flag Link Fri Oct 21, 2011
Josh on target with his professional statements .

If you are looking for a Realtor to assist contact my office I work with home buyers and tenants. I have been a real estate investor with investment properties certainly assist with knowledge of leasing a your home.

You also receive tax benefits owning an investment property CONFER with your CPA

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Fri Oct 21, 2011
Joshua is right on.
I currently want to lease my first home (till market gets better) and purchase a new primary residence. It was mention to me since I have not rented a house in the past two years thus the 6 months on each. I already prequalified with both payments.
0 votes Thank Flag Link Fri Oct 21, 2011
Different kind of requirements need for different situation.You may talk to a mortgage banker to get the clear idea.
0 votes Thank Flag Link Fri Oct 21, 2011
Thanks for the replies. Wells Fargo is asking for 6 months reserves on both houses.
0 votes Thank Flag Link Fri Oct 21, 2011
For a 2nd home we are looking for 3 mo's reserves. An investment would require 6 mo's. If you are buying a new primary residence no reserves are required. If you do not have 25% equity in your current home you will be required to qualify with PITI payments on both properties. You can not use lease payments to offset your debt to income ratio unless you have 25% equity in your current home. I would be happy to discuss your situation further. We are a national direct lender with great rates and exceptional service. Feel free to give me a call.

Joshua A. Lerette
Senior Loan Officer
Residential Finance Corporation
800.930.7334 Ext. 1108 – Toll Free
813.402.4637 – Direct Line
727.488.7355 – Cell
888.692.5967 – Fax
0 votes Thank Flag Link Fri Oct 21, 2011
Please call this lender that I highly recommend and he can answer your question. I'd love to help you find a home when you get the financing sqared away.
Allen Lester
North American Lending
Cell# 469 684-9864
Office# 972 759-5271
0 votes Thank Flag Link Fri Oct 21, 2011
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