The answer is quite simple. The home you currently live in is considered your primary residence and therefore refinancing it will not be an issue. The concern will come when you attempt to purchase the new home. There will be no problem purchasing it the issue will be how to classify it. Depending on how close the home will be to the current home it could be classified as a rental property or a 2nd home. This will require you to put more money down and possibly incur a slightly higher rate. However, there are lenders that would allow you to purchase it as your primary residence if it is considered an upgrade and you can provide proof that the current home would be occupied by a renter. As stated in a previous answer the bank will only count 75% of the rental income towards your personal income. Also it would be a good idea to submit a letter of explanation to the lender regarding the reason for the move. I hope my information helped a bit. If you'd like to discuss this further feel free to contact me at your convenience.
NoJa Mortgage Corp.
Side note...I have a Buyer client who wants to purchase in the Evergreen High School draw and has some very specific search criteria. Please let me know when you are ready to list your house. I'd like to take a look at it before it goes on the market.
With that said, every person's situation is unique, and so I advise you to seek personal advice from your mortgage professional and tax adviser.
Be aware that when qualifying for the loan on your new house the Lender will only allow 75% of the rent as qualifying income for you.
I suggest talk to a mortgage professional about this strategy as there are several different ways to excecute your plan and you should be aware of all factors before starting the 1st step. Remember, what you don't know can cost you money.
The advice below is right on. Because you clearly have a plan established, your next step should be to talk with a Mortgage Professional. The mortgage meltdown and the effects it put on our economy has caused lenders to drastically change how they do business and they continue to change as our law makers require new guidelines. Speak with someone you have used in the past for your borrowing needs, check in with family and friends to see if they have a contact that they were happy with, or I would be happy to provide you with a couple of names that you could call to ask about your specific situation.
If you haven't already, I would also suggest that you start watching the home sales in the area in which you hope to purchase your next home. Becoming educated will help you make a better choice, for you and your family. Think about partnerning with a Realtor that can will provide you with monthly sales reports in your target area.
I would also suggest (if you haven't already) that you check websites like http://www.Craigslist.com or http://www.Rentometer.com to see what you might expect to receive for rent on your current home.
April Tavares, GRI, ASP
Realtor, DRE License #01742179
It is a good time to both refi, since the rates are historic low, and to buy up in a better school district. First thing is to be in touch with a reputable lender, let me know if I can put you in touch with the one I work with. Have you decided which school district you want to move to? I work in Cupertino, Sunnyvale area and will be happy to help you find your new home. Please email me if you would like to set up an appointment.
Monica Goyal, Realtor
Keller William Realty
Heads up: there are now guidelines that impact your ability to buy a house to live in when you are leaving a house and renting it. Unless you will be RENTING when you move, please consult with a mortgage professional about buying a property in the new school district.
Feel free to call me if you need help