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Currently own a home with an $1100/month mortgage. Would like to relocate and purchase another home first, then sell the current home.
Question, are we able to qualify for a conventional loan with regular rates, I have heard when buying a second home it's typically a higher rate as it's viewed as an investment property? We have 20%+ to put down without selling our current home.
How do lenders qualify you in that situation? Is it possible these days to do? Or have the banks become more stringent on this sort of thing?
you're asking a mortgage question, but as a "neighbor" I'll give an explanation. But you really need to talk with an actual mortgage lender in person (meet/phone) ...
Do you qualify to buy the new home, and still pay the mortgage on your Triangle home (when you say relocate, I assume you mean out of the area). And still have reserves?
I'm sure your home here will close within 60 days of you closing on your new home. The risk of you having to pay 2 mortgages is statistically slim currently.
Unfortunately, you're going to be governed by national underwriting guidelines. That's what the lenders require and have to follow.
So, take your current mortgage, add your next mortgage, and divide by your GROSS W2 monthly income. If that number is < 28%, and you have the cash for the downpayment, you're highly probabl to be OK. If it's more than 28%, but your total loan payments are < 36%, and you have more than 5% cash leftover, you are probably OK.
Has nothing to do with "second home" or investment property - unless you're trying to hold your current home as a rental.
Thanks Bo, mortgage forum doesn't get much action.
Ok so estimating $2000 mortgage on new place, +$1100, gives us $3,100 in payments (yikes!).
$3,100 / gross income yields roughly 13.5%.
So we would qualify for normal rates? My main concern is not paying higher than normal rates on the new home. Otherwise we would sell first, then buy, but that is a huge PITA, as where do you go? Cheaper just to pay a couple months of our mortgage since ITI is around $600.
Your new loan would stipulate that you reside in the new house within 60 days of closing to qualify as primary residence for loan rates.
Buy. Move. Sell.
It is quite common, as people do it all the time.
Moving to a new house before selling your first one does not make the new mortgage an investment mortgage. That's just silly. The current house becomes the investment if you keep it, but that rate is locked in, so that doesn't matter either.
You would get whatever par rate you would qualify for as long as your debt ratios are within qualifying parameters.
Your new loan would stipulate that you reside in the new house within 60 days of closing to qualify as primary residence for loan rates.
Buy. Move. Sell.
It is quite common, as people do it all the time.
all of this.
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