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We took a $140K loss on a house we bought in 2007 when we had to move in 2012. Couldn't do a short sale because the half million dollar house was paid off. Silly us.
But it would never have been an option to drag relatives into our financial issues, putting their well being at risk. That's not a choice that would have allowed us to sleep at night.
Maybe I will have them co-sign and maybe I wont, depends on if the lenders will consider lending to us or not. I didn't start this thread asking for advice about my in-laws co-signing, I simply wanted to know if the lenders would require more down considering our situation, so you all can keep your unsolicited advice to yourselves.
Rents in my neighborhood for a house like mine are going for about $1000/month
and my payment is $900... that should cover it no?
Far more no than yes. 900:1000 is beyond VERY tight.
In addition to the current PITI... what other bills does the house incur?
NOO insurance and property taxes? maintenance & repairs? lawn & yard? and so forth.
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I also didn't say anything about in law cash, this will be MY cash.
In that case... use it to pay down the mortgage debt and get out from under.
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My original question was about getting a loan for this new house while being underwater
...and with no mention of a pool of cash on hand or in-laws.
So sorry I didn't have the power of premonition back in 07 when I was priced out of anything closer to our jobs and good schools for the child that wasn't even conceived yet.
So you didn't see it coming in 2007 and you wont see it coming in 2013 either. What happens 5 years from now when the house values go down and your life changes once again. Maybe you loose your job, your job moves, accident or etc and you cant afford either house? The bank will foreclose, then come sue your inlaws for the money. I dont think you understand what co-signing really means.
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so you all can keep your unsolicited advice to yourselves.
As in life, conversations on the internet don't work that way either. You asked for advice, you get the good and the bad. I'm ignoring your request.
So you didn't see it coming in 2007 and you wont see it coming in 2013 either. What happens 5 years from now when the house values go down and your life changes once again. Maybe you loose your job, your job moves, accident or etc and you cant afford either house? The bank will foreclose, then come sue your inlaws for the money. I dont think you understand what co-signing really means.
As in life, conversations on the internet don't work that way either. You asked for advice, you get the good and the bad. I'm ignoring your request.
And Ill be ignoring you until you can figure out how to type your advice out in a non-confrontational way that you wouldn't speak to me face to face with. And yes I understand perfectly what co-signing really means.
I agree with MrRational and 399083453. This seems like too risky a deal to get relatives involved in cosigning. I don't know that there will be a one stop answer for your question of how much down payment will be required, it's going to depend on your current debt to income ratio plus taking into account the new rental (including taxes and maintenance). How will your reserves be once you are carrying both mortgages? What if you can't get a reliable tenant, how much runway do you have?
I have done it, but don't have relative(s) co-sign or anyone else except your spouse. Bank(s) wants to know and you need to provide proof.
1. You and your spouse job must be stable...for example 5 yrs straight no layoff in between.
2. Income support two mortgages without rental income included.
3. Clear your credit debts if you have -- it will help.
4. Credit score needs to be 700+.
5. Enough savings (after closing) to cover 6 months of two mortgages.
6. Make sure to inform the bank that you intend to use your 2nd home as Primary Residence.
7. As primary residence [single-family], you don't need to have 20% down, 10% will do.
8. As primary residence [multi-family], you will need to have at least 20% down. But I got bank to agree at 15% in my case. Large bank...like BofA...20% down is firm.
9. Go to local bank for loans. They are more flexible.
Many posters are alarmed that you want your in-laws to co-sign on a home for your benefit (and not theirs) because we're familiar with the financial catastrophes that often result. Please look up co-signer stories on these forums for examples.
We're all picturing your in-laws getting stuck with payments, debts or even hassles when they need to borrow money for themselves.
You're in a sticky financial situation, but instead of renting an apartment for your family while renting your house or something...you want to get your in-laws on the hook for your next large real estate purchase. Are you sure that's the best decision for them?
PS: If you're still upset that we're responding to the co-signer issue, you should understand that you don't get to dictate the course of conversation. Sorry, but that's the way it works on an internet forum. We can discuss any part of your posts that catch the eye.
Are you planning on renting your current home out for 2 years before buying the new house? Generally lenders want to see two years of steady rental income.
If you can afford PITI on both houses without counting rental income, this might not be a problem.
But even when the lease/rent vs payments looks good on paper, lots of landlords still lose money through bad business decisions including poor tenant screening skills. You have to prove to the bank that you can consistently rent the old house for enough to cover your expenses.
Keep in mind: if your mortgage PITI on the old house is $900 and rent is $1,000, you can't afford more than about one month per year without rent before you're losing money on the rental. And that doesn't account for repairs, advertising, etc that goes along with being a landlord.
Have you really thought out the true expenses you're facing? My inlaws rent out their old house and have about $400 difference between their rent and expenses. They still lose money because tenants ditch rent or cause damages, and then they're slow to repair and re-rent the unit. They just suck at landlording! Not everyone can do it.
And Ill be ignoring you until you can figure out how to type your advice out in a non-confrontational way that you wouldn't speak to me face to face with. And yes I understand perfectly what co-signing really means.
I don't think his post was particularly confrontational. I talk like that "face to face" and people appreciate me being logical and straight forward. It's been years since anyone burst into tears when I defined "co-signer".
Can you clarify the amount of debt that you have on your current home? $900 doesn't seem like much of a mortgage. Couldn't you pay a significant amount of that debt down with $50,000?
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