Quote:
Originally Posted by daluu
Anyone know how this applies to second/vacation homes? I have a second home out of state but would like to get a new primary residence (in state) before renting/leasing out the second home. Living with parents, so have no primary home mortgage yet, unless the second home counts.
I could lease it first if I had to but would prefer not to. Does one need the 25% equity otherwise as well? I don't have 25% equity yet.
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Quote:
Originally Posted by daluu
Yea, most likely, or at least not without a co-borrower (for this new mortgage), (anticipating) based on debt to income ratio. I haven't talked with a lender yet, plan to but saw this thread and thought I'd ask here for opinions first.
FYI, current mortgage in my name only.
Also, I wonder whether in my situation, it would be better to have co-borrower be the main borrower, and I be co-borrower or not. Co-borrower has much less debt (no second home, no car loan), but I make slightly more income and have worked a few more years. Plan to get new home for the family (parents, myself and my sibling/co-borrower), parents don't make enough for a loan.
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Gotcha. Keep in mind the guidelines mentioned at the beginning of this thread apply to primary residences converted to rentals, it does not apply to second homes converted to rentals. If you own a second home now, and want to rent it out and use it's income to help qualify, pretty much all lenders will want you to have claimed the rental income on your tax returns for the past 2 years. There are some that will just accept a lease agreement, and evidence of security deposit and/or 1st months rent, but they are far and few between these days.
So from what you are saying, that you don't feel you'd qualify for both the new mortgage payment and your existing mortgage payment, you would either need to sell the second home or get a co-signer (non-occupying) or co-borrower (occupying). The occupying borrower is always the primary borrower, if they are married and both spouses on going to be on the loan, then usually the spouse who makes more money is listed first, but both spouses would be considered borrowers.
When you are planning on having more than 1 applicant on a mortgage (which happens all of the time), then all applicants debts & income are mixed together to determine qualification. All credit is considered as well, however the lowest middle score from all applicants is used as the "qualifying" score (used for interest rates, program eligibility, etc.). Even though your parents do not make enough on their own, they may still help with qualifying if they are co-borrowers on the mortgage.
This is just general information though, you'd need to spell out all people's income, debts, credit scores and the like in order to get more specific feedback.
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