Home Buying in Yorba Linda>Question Details

Simon, Home Buyer in Los Angeles, CA

Hi all. First time poster here, and I need your expert advice on how I can get unstuck!

Asked by Simon, Los Angeles, CA Mon Jul 15, 2013

Back in 2003 I bought my first home in Diamond Bar cosigned w/ my brother. This home was meant for my retiring parents, my brother, & a younger me. We have ~65% LTV now. It's a comfortable home and great safe neighborhood. Then in 2007 ( buy high! ), I purchased a condo myself in downtown LA. I'm upside down now, but I suck it up and manage OK ( plus downtown has been getting exciting again with all the new developments ). Zoom forward to 2013, I'm married and have our 1st child! We're thinking about #2 very soon and love Yorba Linda, but I don't think banks will lend the money would they? My wife and I both have excellent credit. I currently pay half the mortgage in DB & all of downtown myself which is about 35% of my gross income.

What are my best options? If I rent out my condo downtown, will I be able to use that income towards qualifying for a new home? Or sell one or both homes?

Help the community by answering this question:


I checked with our underwriters and they said it will be tough to purchase another property. Why? If lender knows or figures out that you are upside down on your soon to be rental they are concerned about "buy and bail". Buy a new home and bail on the rental. Many lenders will not consider the potential rental income at all, especially if do not own other rental properties. That being said there is likely a niche lender who may be able to work with you. Best of luck!
0 votes Thank Flag Link Tue Jul 16, 2013
Wow so many great insights form everybody. Thank you Laura. I never knew or even thought about "buy and bail". Here I am not wanting to let anything go!
Flag Fri Jul 19, 2013
You may not be upside down on that condo in LA, I'm under contract with a buyer for an LA condo right now near downtown & we thought that our escrow + another model match that's also under contract were going to sell for much less, but they didn't. It turns out that the one my client didn't offer on, had received 6 offers & is selling for $30K higher than the originally listed price.

This is ONLY because buyers want to get in & get their rates locked before they go up any higher. I don't know how much underwater you think you are on the LA condo, but I'd be happy to investigate further & let you know for sure, then you can decide if you want to keep it & struggle &/or sell it & reduce your stress level.

If you buy a home in Yorba Linda can your brother cover the entire mortgage pymt in Diamond Bar? Is your brother living in that home? I mean, if you sold it, where would he move to? You need to start looking at the Diamond Bar home from an investor point of view. My opinion is if you sold it now, you're going to sell it for a higher price than if you wait for interest rates to keep rising next year.

On the flip side of that argument, buying now & staying in your next home in Yorba Linda until the kids graduate from high school & locking in an interest rate as soon as possible, is going to save you more money over the long run, than if you waited until next year for any possible price adjustments as interest rates rise.

Sorry for all the typing, my clients tell me I'm highly analytical, in the end they appreciate that & I make & save them a LOT of $$$. :)

Shoot me an email directly or just call me, I don't look back on this same Trulia posting for answers after mine.

Emily S. Knell
562-430-3053 c
Realtor Since 1996
Realty ONE Group
0 votes Thank Flag Link Tue Jul 16, 2013
Let's start with the good news, you have a growing family and multiple properties.
Excellent question and you seem to have some of the answers already.
Getting a traditional lender to use rentail income with no track record can be challenging and limited to 70% as well. Getting traditional lenders to loan with high FICA scores can be complicated if your debt to income ratio exceeds their limits. I have a company that I have done business with that has a fantastic financing program for owner occupied property when traditional lenders are challenged. Email me and I will gladly share with you the details to see if it is a fit for your family. Traditional lending could be frustrating.
David Alex Wright, Megan Whitlock
Local agents in North Orange County
0 votes Thank Flag Link Tue Jul 16, 2013
Hi Simon,
I do think you can get a home in Yorba Linda a long as your income will qualify. You will be able to use at least 70% of the income from the rental as income to you. 4 loans is generally what can be done by one entity. So no problem there.
Also if you can prove that your brother or parents have made the payment for the past 6 years on the DB home you will not be docked for that loan. Really there should be no worries getting a new home in Yorba Linda.
Please feel free to call me and discuss your options. I would welcome your questions.
Have a great day,
Connie Bramble
Prudential CA Realty
0 votes Thank Flag Link Tue Jul 16, 2013

You should talk with a couple of lenders to see what the can do for you
It is true they will only counter 70% of the rental income and some may want you to be a landlord for a period of time
Talk to several lenders to help
Position you in buying a place and what you qualify for
If you need a list of lenders I can provide them for you. Let me know if I can help you further

Ingrid Ski Realtor
0 votes Thank Flag Link Tue Jul 16, 2013
Hi Simon,

Let me help you get "unstuck". Call me and I will set you up with a lender who can give you great advice as to your situation.

Sherry DeHart
Seven Gables. Real Estate

BRE 01748116
0 votes Thank Flag Link Tue Jul 16, 2013
Best to talk to a lender... Only 70% of rental income will be considered as income....
Also at this point you have to make a decision as to what is your prioroty for your family for more space etc or finance...
Good luck.
0 votes Thank Flag Link Tue Jul 16, 2013
Hi Simon,
The best thing to do is to consult a lender. There is not enough information here to give you an accurate answer. Credit score, income, equity levels, down payment amount and required cash reserves will all enter into the answer. Please let me now if you need a lender referral.
Good luck,
0 votes Thank Flag Link Tue Jul 16, 2013
Your best option is to speak with a lender about your options. Yes, rental income does count for qualifying for a loan for a new purchase, but you need to find out if that will be enough or if you do need to sell one or both homes. A short sell of the LA condo will inhibit your getting a loan for a new purchase.

If you do not have any lenders you currently work with, I have a list of Brokers and Direct Lenders I can put you in touch with. Just ask them these questions and then see what your best options are. Let me know how I can help you after you decide what will work best for you.

I understand your excitement with downtown LA as both my sons lived there for years - until they had families and wanted to settle down a bit. I also understand you wanting to live in Yorba Linda with your family as I lived there for 25 years and still have friends and family there, and also work with a lot of clients there now.

Cyndi Mino
First Team Real Estate
BRE 01453215
Web Reference: http://www.cyndimino.com
0 votes Thank Flag Link Tue Jul 16, 2013
Hi Simon,
Most welcome on Trulia community! Congratulations on all the well being of your family and its growth. You definitely have a lot going on property management and hope you will find the best agent that can help you with real estate issues.
0 votes Thank Flag Link Tue Jul 16, 2013
First let me welcome you on here, and say congratulations on all the wonderful happenings with your family! You definitely have a lot going on, so hopefully myself or another agent can help you with the 'real estate' portion of your life.

With that being said, there are a number of issues that seem to be in play here...

Since you want to factor in rental income from your downtown condo, you would need to have equity in that property. Based on what you said, you are upside down. This will present challenges in using the rental income on this property to allow you to purchase the third in Yorba Linda. There are ways (like paying down the mortgage with some of your down payment funds) but without more information, I would hold off on suggesting them right now.

Also, you need to determine what you are looking for in terms of purchasing in Yorba Linda? If you are looking to buy a larger house with a larger lot in YL, it is possible the cost of this home will exceed what you would get for either of your other two properties. (Again, I'm short on details on your DB and downtown homes, so this is just an assumption) If this is the case, you will almost certainly need to sell one or both of your properties.

Third, since you are currently paying 35% of your gross income on the two mortgages, you are pretty close to the limit of what most lenders would qualify WITHOUT factoring in the third mortgage payment. I do not know what your wife's financial situation is, besides good credit. Does she have income? Will you be using it to qualify? This may help, but again, you are still upside down on the condo and will be hard-pressed to use the future rental income on another purchase.

Finally, what do you ultimately want to do with the other properties? Are they for investment or rental purposes? Do you want to ride out being underwater on the condo? ... OR ... Do you want to sell both, and use that money to put towards your new home, and hopefully clear out the debt from these and start fresh with your new home in Yorba Linda? These are the things that need to be discussed between you and your wife (and possibly your brother on the DB home). Us agents will only make the things happen to get you what you want.

I hope that helps! I would love to discuss your situation in more detail, so feel free to call or email at the info below. Also, I work closely with a mortgage broker who can handle that portion of your transaction, and get you the best rates possible. And I am happy to donate a generous portion of my commission to support a cause important to you - check out my website at http://www.homes4schools.com to find out more!

Best regards,
Alan Kurpiewski, Realtor®
CA BRE 01912043
(619) 35-HOUSE
(619) 354-6873
0 votes Thank Flag Link Mon Jul 15, 2013
Alan, Wow that was a quick! Thank you for the warm welcome and thorough reply. You've laid out some great options that I'll have to consider. I'm looking for a larger home in YL, maybe 5bd or maybe 3/4bd with a separate guest house. Inside I was really hoping to keep the condo in hopes of rental income someday being positive and helping me ride it out. Do you know if there's a minimum requirement/guideline of how much equity I should have in the condo for using rental income? I feel like I just can't let anything go, but I suppose starting fresh by selling both will be in some sense be easier. I'm leaning more to selling both to fetch me the most to clear debts and still have some down payment. With rates rising, I'm wondering if prices will continue their increase?

Thanks. And keep up the good fight with homes4schools.com!
Flag Tue Jul 16, 2013
Hi Simon,

Congrats on your growing family. Yorba Linda is a great place to raise children. Given your good credit and income, I believe there are several options worth taking a look at. I'd be happy to discuss those with you further and help you get into a great family home in the neighborhood. Please get in touch at your earliest convenience.


Joe Van Fossen
Keller Williams Realty
(714) 584-7154
0 votes Thank Flag Link Mon Jul 15, 2013
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