Locked in to current house, how do we move? (sales, renter)

[Cajunbulldog]

My wife and I went to the bank a few months ago to get more details on moving without selling our house but were more confused than informed after the visit. We are open to renting but were informed that different banks treat rental houses differently with regards to a new loan. The bank we visited actually suggested that a regional or local bank would be better to work with in this situation.

I've read a few posts that I interpreted as people renting out a house and buying another. Has anyone gone through this recently and would recommend banks that would be open to working with us or sharing the specifics of how this works?

A little more info:
The bank we visited was a large national bank. The loan officer we spoke with recommended coming back with a 2 year lease on the house in place. If we could do that, that bank might be open to giving us a loan. From our calculations, debt/income ratio and credit score were not an issue.

To answer a few more questions:
Our house has been on the market and taken off after 10 months, we have explored expanding our house as well but consider the renting/buying another hosue option our best option right now.

All suggestions are welcome, thank you for considering a response.

[noah]

Most aren't willing to take the risk and become a first time landlord in this economy but if finances are not an issue, you can handle vacancies and managing the rental and are interested in being a landlord for several years then it might work well for you. What would the property rent for? Would it cover your expenses? Can you really afford to carry two mortgages? Its certainly harder to get financing but if you get a long term lease in place (sometimes an issue for non landlord's who want to live in the house until they buy a new one) and have a healthy down payment and good W2 income it could probably be done.

How about selling your house at a lower price and making it up by getting a great deal on the purchase of your new house.

Originally Posted by Cajunbulldog

My wife and I went to the bank a few months ago to get more details on moving without selling our house but were more confused than informed after the visit. We are open to renting but were informed that different banks treat rental houses differently with regards to a new loan. The bank we visited actually suggested that a regional or local bank would be better to work with in this situation.

I've read a few posts that I interpreted as people renting out a house and buying another. Has anyone gone through this recently and would recommend banks that would be open to working with us or sharing the specifics of how this works?

A little more info:
The bank we visited was a large national bank. The loan officer we spoke with recommended coming back with a 2 year lease on the house in place. If we could do that, that bank might be open to giving us a loan. From our calculations, debt/income ratio and credit score were not an issue.

To answer a few more questions:
Our house has been on the market and taken off after 10 months, we have explored expanding our house as well but consider the renting/buying another hosue option our best option right now.

All suggestions are welcome, thank you for considering a response.

[Cajunbulldog]

Thank you for the recommendation, our house was on the market for 10 months, we decreased the price 5 times to a point where we lose money if we sold at this price. I'm not opposed to selling for a loss but selling below the last sales price will result in a ~25% loss in 4 years (7% of that is realtor fees) in a stable neighborhood.

Right now, renting seems to be a best option among many bad options. We would use a management co. recommended by friends who have rental properties. The rent would most likely break even with the mortgage so we will have to pay for regular maintenance and upkeep outside of renter damage. We could fill a gap between renters by paying both mortgages for a while but not indefinitely.

Like I said, not a great option, we are still researching a few additional avenues, but curious if anyone has done this with a smaller bank and how it would work.

Originally Posted by noah

Most aren't willing to take the risk and become a first time landlord in this economy but if finances are not an issue, you can handle vacancies and managing the rental and are interested in being a landlord for several years then it might work well for you. What would the property rent for? Would it cover your expenses? Can you really afford to carry two mortgages? Its certainly harder to get financing but if you get a long term lease in place (sometimes an issue for non landlord's who want to live in the house until they buy a new one) and have a healthy down payment and good W2 income it could probably be done.

How about selling your house at a lower price and making it up by getting a great deal on the purchase of your new house.

[hal2814]

I'm currently renting out my former home. In order for me to count rental income, my credit union (who are usually more generous with lending than banks) wanted to see proof on rental income on my tax returns. They would NOT accept a signed (or even signed and notarized) lease agreement. The loan processor told me that enough buyers in the past have abused the system and faked a lease that they will no longer accept them as proof of income. That's sort of a chicken-and-egg problem because I'd have to be renting out my property for a year to show rental income in the first place.

Unfortunately, I don't have a solution for you. I just ended up buying a house inexpensive enough that I qualified for it even with the other mortgage counting against me. But I can tell you that different banks and credit unions have wildly different requirements so definitely shop around. Hopefully you can find one sympathetic to your needs.

[lastminutemom]

Lots of people are just "making do" for the time being so that they don't face your challenge. Any particular reason you want/need to move now?

[Cajunbulldog]

Thanks for the responses, we're expecting a new addition to the family and are looking for a place with more room and more than 1 bathroom. We may in the end make do with our situation but our first choice is to move given some of the challenges of expanding our current house. Will update if we find a bank that will work with us.

[K-SawDude]

Originally Posted by Cajunbulldog

Thank you for the recommendation, our house was on the market for 10 months, we decreased the price 5 times to a point where we lose money if we sold at this price. I'm not opposed to selling for a loss but selling below the last sales price will result in a ~25% loss in 4 years (7% of that is realtor fees) in a stable neighborhood.

But in this market, you're very likely to find a bigger house that is priced at least 25% less than what it was when you bought your current house way back when.

I understand the desire to rent, but I'm not sure it matters that you've "lost" money on the house if you're planning to buy another place that's lost the same percentage or more. The only lost costs are likely to be the closing costs for the transaction.

(Now, if you were planning to sell and start renting, that would register as a loss for sure. Otherwise, you're mostly just breaking even here IF you can find a great deal on a big house--which you're very likely to be able to do.)

[goldenage1]

Originally Posted by Cajunbulldog

Thanks for the responses, we're expecting a new addition to the family and are looking for a place with more room and more than 1 bathroom.

If the house has only one bathroom, adding an additional bath is generally worth the cost.