From a lending perspective, assuming you are going to want a loan on your purchase property, there are rules associated with these types of transactions. The rules vary depending on the percentage of equity you have in your current home and the type of loan you plan to take out--Fannie/Freddie vs. FHA.
Fannie and Freddie require you to have 30% equity (FHA is 25%) in order to count the income from the rental property. They will also want to see a signed lease agreement and that the security deposit has been deposited into your account.
If you are going to be using mortgage insurance (MI) on the new purchase, the MI company may also require you to have six months reserves for each property.
So, one of the first steps may be to talk to an experienced loan officer to see which rules will apply to you and how to prepare to meet those rules and get pre-approved for your new mortgage loan. I would, of course, be glad to help you in this process.
Bill Parker, Loan Officer
AZ Lic# 09011570
CPA--Licensed, no longer practicing
GenCor Mortgage Inc.
15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
(O) 480-525-8496, EXT 743; (M) 602-565-3646; (F) 480-436-5226
MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.
If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter