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I'm looking at buying a condo. The trouble is, I may want to move in the next year or so. What I'm looking to buy would be a good investment vehicle, so the lack of stability isn't holding me back.
I've qualified for a mortgage. I have ok credit. Sadly, I only say ok as since I'm responsible with money, the ********'s at the credit rating agencies give me a low credit rating. My debt to income ratio is pretty much 0. The only debt I have is a car loan which I largely took out to build credit. I can easily pay the car off.
The loan I was looking at required 25% down as it is a condo. The lender noted that I couldn't rent the place out for 2 years. That's seems rather strict to me. Are there other institutions that waive this amount? It's a condo in downtown Seattle and my yearly income is roughly what the condo costs.
I'm beginning to see why there was a housing/bank crisis in this country. They gave loans to people who were not responsible and then people who do things properly get low credit ratings. Sorry, I'll stop now.
Does anyone have any advice on investment vs. regular mortgages? Extra downpayment won't be a problem, but I'd rather not get raped on the mortgage interest. Thanks for your help.
Rule of thumb to have good credit scores is you need to have minimum 3 open lines of credit. You don't have to carry debt, it's ok to pay the cards in full each month.
You should be able to put 25% down with an non-owner occupied mortgage to purchase condo and subsequently rent it out... that is primarily what investment mortgages are for, income producing properties. With great credit interest rates are roughly .25-.375% higher than owner occupied mortgages.
If you have an existing portfolio of financed properties it can be difficult to obtain more investment property mortgages when you are looking to do 5+... you didn't indicate that was your issue, but in that situation often the terms aren't as favorable since very few lenders offer traditional financing, so maybe that is what you were insinuating about getting "raped with mortgage interest", having to accept private/hard money terms.
Owner occupied mortgages require you to occupy the home within 60 days of purchase, so if you aren't planning on doing that, that is where you are getting resistance in trying to buy it as a primary residence. Can't buy a primary residence, plan on moving in later, but rent it out in the meantime. Well logistically you could, but that's loan fraud and very bad things will happen (karma or legally).
Your credit profile dictates your credit score ("rating" as you call it), so while it's true that the credit agencies determines someone score... it's related to what that someone did to their credit in the first place. When your credit is checked, there are reasons listed to why your score is the way it is, i.e. insufficient credit, high credit card balances, public records, delinquent accounts, etc. You can get those reasons either when you are disclosed for the property you are buying, or by requesting a consumer version of your credit report from your loan officer (they should have a way to "trim down" their credit report into a consumer version which has truncated account numbers, SS#'s, etc.) but will still have all of the scores, comments, account info, balances, payments, etc.
Conventional financing terms, which is what non-owner occupied mortgages are, are sensitive to scores... so making sure your scores are as high as possible (ideally 740+) is key for you getting the best terms.
Alternatively you could choose to purchase the condo as owner occupied closer to when you are looking to move in, but you don't get it to rent it out.
I would be living there for at least 8 months. I may be moving at that point. My credit isn't at the 740 level. The whole credit scheme itself is ageist. Older people will always, all things held equal, have better credit.
I would be living there for at least 8 months. I may be moving at that point. My credit isn't at the 740 level. The whole credit scheme itself is ageist. Older people will always, all things held equal, have better credit.
Not true. If an older person doesn't have much/any credit history they would be in the same boat as you. Age doesn't factor in, but legth of credit history does.
I would be living there for at least 8 months. I may be moving at that point. My credit isn't at the 740 level. The whole credit scheme itself is ageist. Older people will always, all things held equal, have better credit.
Need to intend to occupy it for 1-2 years depending on the program. So if your intention isn't to do so, I can see their position.
And you know, older people have been on earth longer, so they have that going for them.
Not true. If an older person doesn't have much/any credit history they would be in the same boat as you. Age doesn't factor in, but legth of credit history does.
I agree, I'm renting to someone this week who is in his late 40s, and has paid cash for things most of his life, so his credit report has only one item on it. Experian didn't even give him a score when I pulled his report, just a 9003 code, meaning not enough credit to score.
It IS however, biased against those who have adequate savings and just pay cash for everything. If I didn't make an active effort to keep several lines of credit open, in about 7-10 years, all my credit history except my house would drop off my report, leaving me with less than stellar credit.
So there definitely is a bias in the system, and it definitely can be against those who make more than they spend. But that has nothing to do with age.
In fact, as people get older, if they have their house and cars paid off, and start living off retirement savings instead of charging things, they may have the same problem. Things start dropping off the credit report after a while, and credit scores drop.
I agree, I'm renting to someone this week who is in his late 40s, and has paid cash for things most of his life, so his credit report has only one item on it. Experian didn't even give him a score when I pulled his report, just a 9003 code, meaning not enough credit to score.
It IS however, biased against those who have adequate savings and just pay cash for everything. If I didn't make an active effort to keep several lines of credit open, in about 7-10 years, all my credit history except my house would drop off my report, leaving me with less than stellar credit.
So there definitely is a bias in the system, and it definitely can be against those who make more than they spend. But that has nothing to do with age.
In fact, as people get older, if they have their house and cars paid off, and start living off retirement savings instead of charging things, they may have the same problem. Things start dropping off the credit report after a while, and credit scores drop.
Very true. Unfortunately people basically need to utilize some credit througout their lives or eventually they will run into an issue.
Need to intend to occupy it for 1-2 years depending on the program. So if your intention isn't to do so, I can see their position.
And you know, older people have been on earth longer, so they have that going for them.
Oh, and technically, your "all things being equal" clause makes the rest of your statement false. A 50 year old that has a 10 year credit history has exactly the same score as an 80 year old with a 10 year credit history, all things being equal. The system doesn't care how old you are, only the age of your credit history.
You should also check the HOA rules on renting for the condo you are buying - caps and even outright bans on renting units are commonplace today.
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