Home Selling in Renton>Question Details

Underwater, Home Seller in Renton, WA

I owe more than what my house is worth and I would like to get a new home. Will it hurt me getting approved if I keep it and rent it out ?

Asked by Underwater, Renton, WA Tue Nov 8, 2011

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6
The only issue I see is that you'll have to be able to qualify for the two mortgages. The lender doesn't care if you're upside down on the first house. They just want to make sure you're making your payments. You should talk to a lender or mortgage broker and see what you qualify for.
2 votes Thank Flag Link Tue Nov 8, 2011
Underwater,
As others have said, as long as you qualify for both mortgages you may get approved. Using your current home as a rental isn't a problem but using the income from that rental may not happen right away. I've understood that you need to have a signed lease and receipts of rent received. If you don't have, or can't provide that, but your income is high enough that you can afford both mortgages and other debts you may be okay. If you are reliant on the rental payments to cover your full monthly obligation you may run into trouble.
Rather than rely on our partially informed opinions, your best bet will be to sit down with a lender who can look over your full scenario and give you the best answer based on all the facts.
As a former lender as well asa current Realtor, we run these scenarios all the time and welcome the opportunity to provide you with a clear picture of your options.
1 vote Thank Flag Link Tue Nov 8, 2011
The main question I would ask you back is what is your income and what are all your other minimum monthly payments. If you have good income and little other debt this shouldn't be a problem.
1 vote Thank Flag Link Tue Nov 8, 2011
Sally is right. The lender on the new home will count all your debt & 75% of the rental income. You will need a signed lease & proof of deposited funds from the lease in most cases. I would be happy to discuss details with you. I am both a lender & a real estate broker. 206-841-9976
Web Reference: http://www.metromgi.com
1 vote Thank Flag Link Tue Nov 8, 2011
Hi Underwater,

I would like to recommend you visit with a mortgage planner to look at your entire situation. I can recommend a very experienced one to you.

You can certainly keep your home, rent it out, and buy a new home. You do have to establish a one year history as a landlord, to have the rental income be much of an offset against your mortgage debt.

None of us can give you a good answer because your options are a result of your total financial picture.
If you can qualify, keeping your current home as an investment property, which then creates a rental property business for you, with all the wonderful tax advantages, is a very smart strategy.

Another reason to visit with a mortgage planner is to see if the over 100% loans are available for you to lower your interest rate on your current home.

Good luck.

Warm regards,
Karen
0 votes Thank Flag Link Tue Nov 8, 2011
Not so much, a lot depends if you can qualify for purchasing a second home. Feel free to contact me and we'll see what we can do. BTW, great question as many others are in the same boat as you!!
0 votes Thank Flag Link Tue Nov 8, 2011
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