If you are looking to buy a new house, and want to keep your current home as a rental property, on a Conventional loan you need to show the lender who is making the loan on your new home some things that you would not if you were selling your current home instead of renting it. You need to show 6 months "cash reserves" after the down payment and closing costs on the new house, and you need a 70% loan-to-value (LTV) on your current home, as evidenced by an appraisal.
If you meet both of these requirements and have a lot of equity and cash reserves, you can count the rental income on your current house to offset the mortgage, which will help you qualify for the new mortgage. Otherwise, you will have to qualify for the new mortgage carrying "all" the debt on the current mortgage and using no rental income to offset the debt, and usually most people cannot qualify for two mortgages at the same time.
And if you do meet the cash reserves and the 70% LTV requirements outlined above, the banking industry will only count 75% of the gross rent on your current home (as evidenced by a lease) to offset the mortgage. They take away 25% to account for vacancies, expenses and maintenance. So if you have a $3,400 a month mortgage, and can show a $4,000 a month lease, they will only count 75% of that $4,000 a month lease (or $3,000) against the old mortgage. In this case, $4,000 gross rent, with $3,000 net rent (after a 25% deduction on the $4000 gross rent) would leave a $400 a month shortfall and would be counted against you as a debt in your debt ratios.
When people learn of the above, they end up realizing that in many cases they need to sell their current property, because they do not have sufficient equity to meet the requirement and they cannot qualify carrying two mortgages at the same time without counting rent to help cover the old mortgage.
If you are taking out an FHA loan for your new purchase, the rules are the same except you only need a 75% Loan-To-Value on the current home, as evidenced by a recent appraisal. Either way, buying a new home without selling yours, and trying to rent your current home, has become much more difficult.
Maybe you can move out of the house, rent your unit, start to collect the rent from your mother on the books, and show a 1 year history of collecting the rents. Then if you can show a tax return that shows that you have a one-year history of collecting rents, the equity requirement goes away. Then you could use the rental history to offset the mortgage, and buy what you want. Of course, that means you're going to have to go be a renter somewhere else for a year. Good luck.... more
it is a good idea but you may get killed by mortgage and insurance they will be as an investment not as owner occupied let me know if you are in new jersey bergen county area thank you 862 221 6098... more
For construction loans in New Jersey call Francisco Mayol at Clifton Savings Bank 1-917-547-9298 He offers construction loans for People who Own the Land & want to build a house.
Construction Loans good for 1 year, no limit draws, Current rate 3.75%, Term 30 yr loan, 1 closing... more
Gregory, If you stay here and are working here the answer is that you can purchase a house with a 30% down payment. If you cannot stay here and don't work here then you can purchase a house with a 50% down payment.
The kicker here is that the minimum loan amount is $300,000
You may reach me at 732-539-9300 or email@example.com
Camille Marotta, Branch Manager NMLS 9838
Residential Home Funding
7 Pelican Drive, Suite 3
Bayville, NJ 08721... more
Keep in mind that rate is what matters, not term (assuming there are no prepayment penalties of course). A 100 year mortgage at 4% is better than a 30 year mortgage at 5% because you can pay on any amortization you want.
Using your scenario as an example:
Let's say your loan had been 400K when you started. Your monthly principal and interest would be $3,111.33. After 8 years your remaining balance would be $194,589. Add 1500 in costs and you're at $196,089, which makes the monthly payment on a 15 year $1,342.40. However, if you add $1300 to that payment, making is $2,642.40 (roughly $500 less than your current payment), you'd pay the loan in 6 years and 9 months.... more
I am assuming that your mortgage is owned by Freddie Mac and not Fannie Mae because it would not make a difference if it was a Fannie Mae owned HARP refinance. If indeed this is Freddie Mac, you may find it difficult to find a lender regardless of whomever says they can help you.... more