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Hello everyone, first timer here on the forum and looking for some opinions.
As the title says, we have discussed many scenarios on what to do with the first home (condo) but it gets nowhere.
We currently owes the lender the same amount as the current market value for the condo. This is based on current list price for other units and the recently sold units (less than 5 months) in the building. If we put our unit for sell, we are going to bring out of pocket money (around 30K) to the table at closings.
Our income can support two mortgages without proposing the 'renting out the first home'. These are the options/scenarios that we discussed:
1. Put the condo on the market to sell and take the hit. Rent short term while looking for the single family home.
2. Buy 2nd home to be used primary residence (provided that the lender(s) give us mortgage), put the condo on the market to sell. Take the hit.
3. Buy 2nd home to be used primary residence (provided that the lender(s) give us mortgage), rent out the condo.
4. Forget the 2nd home buying idea. Pay off the condo in 5 years, then sell, then buy the single family home.
Scenario #4 is least favorable. We need bigger house now, and by that time our children have grown and will not need backyard to play.
I am running into a brick wall, I need fresh opinion(s).
We are still in a buyers market. So selling now is not a great idea but buying now is. I would say option 3 would be your best choice. You can get a great deal on a new home now plus you need a bigger home today.
I am assuming the next home is higher in price than the current condo? I ask this because if the condo is valued at $200,000 but the home is valued at $150,000, the lender will consider the new home purchase a investment property which carries higher rate and more down payment.
We are still in a buyers market. So selling now is not a great idea but buying now is. I would say option 3 would be your best choice. You can get a great deal on a new home now plus you need a bigger home today.
I am assuming the next home is higher in price than the current condo? I ask this because if the condo is valued at $200,000 but the home is valued at $150,000, the lender will consider the new home purchase a investment property which carries higher rate and more down payment.
Option #3 is our best option too, but we've never been a landlord before. The baggage that comes with being a landlord scares the hell out of us.
Yes, the new home is going to be valued more than the condo, almost as twice. With the tight credit and the 'buy and bail', we afraid that the lender(s) wouldn't take a look at the application. Here's some numbers. We owe approximately 190K for the condo, and we're looking to buy up to $350K. We have only 1 debt (student loan (mine), $150/month payment) and our combine gross monthly income is around $11K. We're looking to put down 10% (we could do 20% but it will stretch us very very thin..we would rather not do that).
[quote=nzone;16272578]Option #3 is our best option too, but we've never been a landlord before. The baggage that comes with being a landlord scares the hell out of us. quote]
Option #3 is our best option too, but we've never been a landlord before. The baggage that comes with being a landlord scares the hell out of us.
Yes, the new home is going to be valued more than the condo, almost as twice. With the tight credit and the 'buy and bail', we afraid that the lender(s) wouldn't take a look at the application. Here's some numbers. We owe approximately 190K for the condo, and we're looking to buy up to $350K. We have only 1 debt (student loan (mine), $150/month payment) and our combine gross monthly income is around $11K. We're looking to put down 10% (we could do 20% but it will stretch us very very thin..we would rather not do that).
With 10% down, make sure you do a 80/10/10 loan. That is a first lien to 80% of the purchase price, a second lien for 10% and 10% down. This will render you the best overall mortgage.
If you do a single loan for 90%, you will have to pay private mortgage insurance. With your income, PMI would not be tax deductible which makes choosing a loan with PMI a bad option for you. Also, if you do a single loan you will be required to escrow taxes and insurance. By splitting the mortgage you have the option to not escrow. I am a big boy and can manage my own funds so i dont need the lender to do that for me.
I am new in this fourm, and want to explore new things related to Real Estates, different people, and their views about buying and selling home, so that I can suggest my uncle in buying his dream home. He is looking for home in Avon. He is a peace loving person, and want a house, which meets his requirements.
Option #3 is our best option too, but we've never been a landlord before. The baggage that comes with being a landlord scares the hell out of us.
Yes, the new home is going to be valued more than the condo, almost as twice. With the tight credit and the 'buy and bail', we afraid that the lender(s) wouldn't take a look at the application. Here's some numbers. We owe approximately 190K for the condo, and we're looking to buy up to $350K. We have only 1 debt (student loan (mine), $150/month payment) and our combine gross monthly income is around $11K. We're looking to put down 10% (we could do 20% but it will stretch us very very thin..we would rather not do that).
We are in the exact same scenario as you and we have considered renting our condo out because we found a house we love and want to buy. I would suggest looking into a property management company. From what I have found they seem pretty affordable if you do your research. I found one company that only charges 5% a month of your gross rent. The only other charge is to place tenants. They charge one months worth of rent to find and place a tenant, which seems fair to me. And if your tenant stays a couple of years that seems more then fair. They also do all the work. They screen potential tenants, get deposits, get rent checks from them, send you the rent payments and everything. You obviously have to pay for the upkeep of your condo (repairs etc..) but they also should have companies that outsource all that work for you and they will just send you a bill. If you can afford the 5% out of your rent a month and the tenant placement maybe consider it...
How much can you rent the condo for? How much is your mortgage? Will the rent cover the mortgage? Will there be a shortfall. I would not rent it out if you have a short fall.
How much can you rent the condo for? How much is your mortgage? Will the rent cover the mortgage? Will there be a shortfall. I would not rent it out if you have a short fall.
As the OP stated, if they sell they would need to bring about $30,000 to close and sell it. Even if they have a short fall of $500 a month between what they pay and what they rent.. i think paying $500 a month is better than sinking $30,000 today.
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