You WILL be able to buy another house, but you will not be able to use any rental income from your current condo. Also, you're going to need to have six month of reserves set aside for the condo and two months for the new house. This would in addition to the down payment and closing costs.
As others have said, we've got a lot to talk about, and many different options to explore.
If you'd like to talk, I can be reached at 773-416-7107.
Senior Mortgage Consultant
I can share with you the lender's perspective as it pertains to your rental income and a tenant in your current home.
The primary concern is allowing you to move on and have the lender in the position of now having a loan on an income property and not your residence. They know you will do whatever you can to keep a roof over your head, and the default rate on a loan is much lower overall than on investment property like this.
In effect, you are going to be in a position if you buy a new house to far more easily walk away from your condo. The lease is just a piece of paper, and the income you get from rent from a lease is only as good as the tenant, a person your lender has no control over. If you cannot show enough income on your own to carry both notes, the bank is well aware that in a future situation of distress, you will pay your primary mortgage before you pay on the condominium.
In other words, they see your renting of the condo, which all know is underwater, as a possible exit strategy, and not a good ending for them if that happens.
I am not passing judgement here on what is right or wrong in any of this, but I can tell your this is how it will be approached by your current lender.
There may be ways to make this happen, but this is the framework you are starting from, and should help you understand how the bank is looking at your wanting to rent and move to a more expensive house.
The refi will be difficult unless your unit falls under the HARP-2 guidlines.
You can do an 80/10/10 loan up to $521k purchase price and still fall under conventional terms. 80% 1st mortgage, 10% second and 10% downpayment. Typically, you can count up to 75% of rent towards your income for pre-qualification.
Call or email me and I can refer you to some good lenders.
This is a lot to cover - good news is that there are options for everything that you are looking to do- except using rental income from your current residence.
I can help you with the refinance and the bet part is that we will not need an appraisal.
I have several other options for your purchase as well. Please call me at your convenience.
Senior VP of Mortgage lending
Looks like you have done a lot of homework.
My recommendation for you is to get officially prequalified for a possible refi of current condo and purchase of new home. By supplying the necessary documentation to a Loan Officer a more thorough and accurate response can be provided to you.
As per refinancing your current condo, you mentioned that you were $70k underwater and they still refied you to a rate that saved $300/mo! That's fantastic. You need 2 years of rental history to count towards your income.
As per a JUMBO, you can split it up into 2 loans or some lenders will allow you to go up to 90% LTV with no PMI. It really just depends on the details.
Feel free to contact me should you need any assistance. I'd be glad to help.
Now, I'm looking to move. Ideally, I'd like to move into a single family home in the North or Northwest suburbs. I've crunched the numbers, and I think I can afford a home up to about $600k. My credit rating is excellent, I've had a stable job for almost 10 years, and I have enough cash at hand for around a 10% downpayment with about a year of PITI. I think selling my current condo is pretty much out of the question, though. I'm fairly certain that I'll need to rent my current condo. So, with all of this in mind, I had a number of questions:
- Are there lenders out there who would refinance an existing 4.25% FHA LPMI loan down to 3.25-3.5%? Or does the LPMI really preclude this from being a realistic option?
- In order to get the rental income for my current condo to count towards my monthly income, what do I need to do? I've been trying to find some information about this on the internet, and I'm reading a lot of conflicting information. Some say I need a signed lease with at least 1 year's worth of documented rental income. Others say I just need a signed lease with a security deposit. Most, however, agree that only a portion of your rental income gets counted. Usually 75%. What's the real story here?
- Assuming that I do qualify for a $600k home, that puts me into "jumbo loan" territory. I've read that you'll typically get much better rates if you split that into two different loans with each loan below 417k confirming loan limit. What are the typical "hidden" costs associated with this sort of loan arrangement over a jumbo loan? And is it possible to get these loans without a PMI if I have less than 20% down? I've heard of things like SFMI, SPMI, etc... but I don't really know how to qualify for them.
Thanks in advance to any who can help answer any of these questions!