reserves

Asked by Hollie, Tracy, CA Wed Nov 3, 2010

I was told that we need to have 9 months worth of reserves on each property if we want to buy another house. Is this right?

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4
Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Wed Nov 10, 2010
With an income property purchase, 6 to 12 months PITI & HOA if applicable, is usually required with 2 to 3 months on your primary residence.
Web Reference:  http://www.umboc.com
0 votes
Hollie, Home Buyer, Tracy, CA
Thu Nov 4, 2010
Thank you all. It's really hard to get finance nowadays
0 votes
John Dutra, , Fremont, CA
Wed Nov 3, 2010
Hollie,

If you are buying a second home or investor property, it is not uncommon for most lenders to ask for as much as 12 months of reserves depending on down payment, credit and program.

Investors are under heavy scrutiny after the fallout from 2007-2009. So many buyers purchased homes with little or in some cases no down, low credit and more - only to walk away from those same investor homes when the crisis hit, that lenders are wary of lending on those homes.

The good news is that in some cases, lenders will look at 401k or IRA (retirement funds) as reserves if you can prove that the money can be withdrawn in emergency or hardship situations.

In either case, if you have less than 30% protective equity in your current home, they will qualify you for both payments, not using any rental income to offset the payment from the purchase.

If you have any further questions, please feel free to call or email me anytime.
0 votes
Constantine…, , San Diego, CA
Wed Nov 3, 2010
If you own more than 5 financed property I believe it is correct.
Web Reference:  http://e-approval.com
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