Rent out my first home and purchase a second?

Asked by Kyle O'connor, Billerica, MA Tue Jun 12, 2012

My family is getting larger and we are outgrowing our property.

Is it possible to rent our current home and still qualify for a mortgage on a second home? (which will become our primary residence)

We have been told that rental income will be $600 per month above what our current mortgage on the home is. (Area Realtor)

Combined annual gross income of $130,000 with a $400 car payment.

Any and all advice is greatly appreciated!

Kyle

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3
Wen Farina, Agent, Reading, MA
Wed Jun 13, 2012
Hi Kyle,

the short answer to purchasing another property and keeping the one you have to use as a rental is yes, it is possible, but there are other variables to consider to see if you will qualify for the mortgage such as your DTI (total debt to income ratio), downpayment, how long you've owned your current home?. Your Realtor should be able to assist you with this and guide you through the process, if you are not working with one and we can be of assistance let us know by emailing us at wen@wenrealty.com
1 vote
Jennifer Eri…, Agent, Wilmington, MA
Sun Jun 17, 2012
Hi Kyle -

Yes you can. You need to have an in depth discussion with your lender though. A lot of lenders are wary of buyers that hold onto their residence and buy another one. There is a fear of "buy and bail" - where a person buys a new home and then lets the other one go. You will need to provide certain things to your lender to satisfy them this is not your intent. Usually you will need to provide a letter stating the benefits to you as to why you are buying the new home, ie closer to work, growing family needs a larger home, etc. You may also need to have a lease in place on your current home to show that it will be rented. Obviously you will also need to qualify with both residences.

If you do not have a lender already in play you can email me through my profile and I will send you a contact of someone very familiar with new regulations in this current lending environment. You would rather know exactly what is needed up front than get half way through the process and run into a snag.

Good luck and let me know if I can do anything to assist.
0 votes
Terry Bell, Agent, Santa Rosa, CA
Wed Jun 13, 2012
There are many tax benefits of having rental property, but also can be more work and expense than anticipated. Discuss the benefits with your tax accountant, and talk to a mortgage broker about what your would need for a new loan for your new home.
0 votes
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