Will the bank let me carry two mortgages?

Asked by Al Patel, 30004 Sat Aug 20, 2011

I am in the market to upgarde to a large home. I current home is underwater and my credit is very good (750 ) with no missed payments on the mortgage. My current mortgage (1,400) and student loan (200) are my only obligations. When I use this info and 60K down (20%) in a "how much home can I afford" calculator (there is no place for current mortgage so I include it as other obligations), I get back a number that will let me buy the larger home. Using the mortgage calculator I can afford both mortgages, but will the bank see it differently? I don't want to waste my time looking at new homes if in the end I won't be able to get a mortgage.

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Timothy Brown, Mortgage Broker Or Lender, 30303
Sat Aug 20, 2011
BEST ANSWER
You raise a very good question. There are two issues in play that banks will evaluate in determining whether to finance your new home purchase. The first is your debt to income ratio. You mention your current mortgage and the student loan which total to $1600. Assuming the new mortgage plus the attendant homeowners insurance and property taxes hypothetically totals to $2500, your total debt load is $4100. Dividing this number by .45 (45%) will tell you the minimum income you will need to qualify. The minimum income required in my example is $9111. If your new mortgage payment is higher obviously more income is required.

The second issue is that of asset reserves. Because your current home is under water value wise, you will be required to demonstrate 6 months of payments on BOTH mortgages in reserves. Using our example above, you would need to show $1400 x 6 months or $8400 plus $2500 x 6 months or $15,000 in reserves in addition to your down payment. The asset reserves can be in stock portfolios, retirement accounts or standard checking and savings accounts. There are offsets to retirement accounts and other asset types which I would be happy to detail for you.

Assuming you pass these two hurdles and your credit is as good as you say, you will have no difficulty buying a home in the current environment.

Email me if you need more specific guidance on your particular situation.


Timothy Brown | Managing Broker
Academy Residential Mortgage, Inc.| tbrown@academyresidential.com
11380 Southbridge Pkwy, Suite 200 | Alpharetta, GA 30022
678.468.5626 x110 | fax 678.935.1156 | cell 678.467.9959
1 vote
Aaron Mtuanwi, Agent, Conyers, GA
Sat Aug 20, 2011
The best thing is to get with the lender to run the figures then you can find a comfortable position to be.
I am sure you can qualify, but it is good for the bank to run your income figures.
1 vote
Sandy Thacker, Mortgage Broker Or Lender, Atlanta, GA
Wed Nov 13, 2013
As long as you qualify (as detailed below), you should be in great shape. Having said that, you really need to discuss your scenario with a seasones loan officer as there are guideline chnages on the horizon effective January 2014. What qualifies today may not in January.

Sandy Thacker
Sr. Mortgage Banker | Consumer Direct Lending
CBC National Bank
NMLS 204575

3010 Royal Blvd. South | Suite 230 | Alpharetta, GA 30022
770-826-3058 Cell
678-935-1154 Fax
0 votes
, ,
Sat Aug 20, 2011
Tim Brown gave a great answer. I'd like to add that if your current home is not fha, then you can buy the home via fha with as little as 3.5% down and no reserves are required. However, fha carries mortgage insurance regardless of the down payment. I believe the IRS is going to stop allowing MI as a tax deduction in 2012. Someone else mentioned offsetting the current mortgage with a rental agreement. That no longer holds true as of july 2009. You must have at least 30% equity in the house or have rented it for 2 years in order to offset the mortgage on your current home. Most banks allow you to have a maximum of 4 mortgages, not including the one with them, while others have no limit on the amount of properties with mortgages. I've used Tim Brown to do loans for me and he really knows the rules. That's key when doing a loan. You don't want to use just anyone and find out at closing that you don't qualify for a loan. If I may also make a suggestion, if you are going to keep the current home to rent, refinance it to a lower rate (even if on an ARM for 5 years) to take advantage of it being a primary residence etc. There are still programs available for properties that are upside down. Fha allows up to 56% of your gross income while conventional only allows 45% (fannie mae)/50% (freddie mac).
0 votes
You're not going to find out at CLOSING that you don't qualify for a mortgage. Ridiculous statement.
Flag Tue Aug 9, 2016
Linda Jones, Agent, Canton, GA
Sat Aug 20, 2011
Mr. Patel,

You did not indicated what you are going to do with your current home. If you are going to retain this home as a rental property and will be off-setting this obligation with rental income you will definately want to have your mortgage company be aware of this fact. The 30004 area is a highly sought after area for rentals. I will be glad to give you currently rental rates for your neighborhood if this is an option that you are considering.

Being pre-qualified for the new mortgage is the first step on your search for a new home. Most foreclosures and short sale homes require an approval letter from your mortgage company when submitting an offer.

Please let me know if I can be of any help in this process.
0 votes
Ed and Andrea…, Agent, Cumming, GA
Sat Aug 20, 2011
Most of the time the bank or mortgage company will allow you to carry two mortgages if your debt ot income ration is okay. You can only have 1 FHA loan under most circmstances although there are some exceptions to that as well. I have several great mortgage people on my team and work with buyers in the Alpharetta area. I would be glad to help.

Ed Converse

Edconverse@gmakl.com cell: 404-936-8980 Give me a call please.:
0 votes
Steve Pate, Agent, Cumming, GA
Sat Aug 20, 2011
Call me and will run the numbers and give you the correct answer.
Steve Pate
678-807-0050
0 votes
davidwbrower, , Woodstock, GA
Sat Aug 20, 2011
Dear Mr. Patel,

You are on the right track. However, I wouldn't suggest trying to figure it all out on your own. Let me suggest you provide all the information to a qualified loan consultant who can help you determine the probability of obtaining a loan on this second home. Many people have been able to qualify for two homes. I wouldn't recommend it unless you want to keep the other home as a rental property or something like that. If you need a great loan consultant, call my friends over at Southeast Mortgage. Ask for David Neimark, 770-279-0222. Hope this helps.
0 votes
Rodney Mason, Mortgage Broker Or Lender, Atlanta, GA
Sat Aug 20, 2011
It all depends on your qualifying monthly income. Your total debts (including both mortgage payments) should not exceed 45-50% of your gross monthly qualifying income.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Conventional | FHA | FHA 203K Renovation (Streamline & Consultant) | HomePath® |
HomePath® Renovation | VA | USDA | GA Dream
Web Reference:  http://www.rodneymason.com
0 votes
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