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Message
Odds of getting approved for a second mortgage
Posted on 6/13/13 at 2:53 pm
Posted on 6/13/13 at 2:53 pm
Here is our situation: We have a home being rented. Good renters, pay on time, take care of the home, lease/purchase agreement...they've been in the home for 1 1/2 years now...still haven't purchased the home...they still intend to buy it but just haven't at this point. We now live 2 hours from that home.
My wife is pregnant with our 2nd child...we're in a small 2 bedroom apartment and I have found a home in our area for around 130,000 (appraises for 170,000)...I'd like to make a move on this home but I have my doubts that I'll be able to secure a second mortgage...
Wife and I both work...we take in around $4500 per month total (after taxes)...would a lender even consider us for another mortgage if we show that we have good renters in our other home, their rent pays for that mortgage, and that we both have jobs...thoughts?
My wife is pregnant with our 2nd child...we're in a small 2 bedroom apartment and I have found a home in our area for around 130,000 (appraises for 170,000)...I'd like to make a move on this home but I have my doubts that I'll be able to secure a second mortgage...
Wife and I both work...we take in around $4500 per month total (after taxes)...would a lender even consider us for another mortgage if we show that we have good renters in our other home, their rent pays for that mortgage, and that we both have jobs...thoughts?
4
Posted on 6/13/13 at 2:56 pm to Chaplain
If you lost your renters, would you be able to support both mortgages?
Posted on 6/13/13 at 3:08 pm to DontTazeMeBro
Yes we would...we'd be scraping by but we would make it...if that happened then I'd just bite the bullet and hire a realtor to sell it.
Posted on 6/13/13 at 3:18 pm to Chaplain
How much do you owe on the first house and how much is it worth? Does the rent cover all the expenses and mortgage or do you have to come out of pocket each month? What about taxes and building a reserve fund for when the house is not rented or the water heater goes out.
I am not saying no, but these things must be considered. Also the pain in the arse factor especially with it being 2 hours away.
As a real estate magnate rule number 1 is never think things will stay the same.
Do you have any savings?
I am not saying no, but these things must be considered. Also the pain in the arse factor especially with it being 2 hours away.
As a real estate magnate rule number 1 is never think things will stay the same.
Do you have any savings?
Posted on 6/13/13 at 3:28 pm to Chaplain
Are you maxing out retirement savings? How much is your disposable income now??
Posted on 6/13/13 at 3:30 pm to iknowmorethanyou
Probably should put 20% down
Posted on 6/13/13 at 3:51 pm to StrangeBrew
I owe about $161,000 on the first house (bought it for 165,900 3 years ago)...the rent covers all expenses...I don't have to come out of pocket currently...we wrote the contract where the current renters take care of all repairs if they are needed. It's a brand new home so repairs are minimal at this point. We have 36,000 in savings right now. I've maxed out my ROTH IRA in 2012 and 2013 and max out my 4013b employer match through my work (3%).
This post was edited on 6/13/13 at 4:00 pm
Posted on 6/13/13 at 3:53 pm to Chaplain
I'm considering putting 20,000-25,000 of the 36,000 we have in savings as a down payment for house #2...good idea? That way we'd still have an emergency fund of around $10,000
Posted on 6/13/13 at 4:12 pm to Chaplain
You sound overextended. What is gross annual household income?
Posted on 6/13/13 at 4:14 pm to Chaplain
I think you're banking on the renters not leaving.
And that's a bad bet to bank on.
And that's a bad bet to bank on.
Posted on 6/13/13 at 4:17 pm to Chaplain
quote:
)...the rent covers all expenses
Did you claim the income on your income taxes? This is important.
Posted on 6/13/13 at 4:25 pm to Chaplain
Have you approached your renters again about buying the property? Maybe give them a sweet deal just to get out from under it so you don't have to worry about it anymore. They're already in the house, so it seems like you could close pretty quickly.
Posted on 6/13/13 at 4:38 pm to Chaplain
quote:
I owe about $161,000 on the first house (bought it for 165,900 3 years ago)...the rent covers all expenses...I don't have to come out of pocket currently
Probably not according to a lender. They're only going to use about 75% of the rent as actual income. Standard operating procedure.
You're also going to have big problems getting a second mortgage on a rental income past a certain LTV which will be in the 75%-80% range for total LTV.
Best of luck to you.
Posted on 6/13/13 at 5:23 pm to VABuckeye
quote:
They're only going to use about 75% of the rent as actual income. Standard operating procedure.
correct. it makes the debt to income a wash. if rented out correctly.
Posted on 6/13/13 at 7:43 pm to LSUGUMBO
quote:
Have you approached your renters again about buying the property? Maybe give them a sweet deal just to get out from under it so you don't have to worry about it anymore. They're already in the house, so it seems like you could close pretty quickly.
I plan to do this soon.
Posted on 6/14/13 at 9:53 am to Chaplain
if you claim the rent on your taxs then a lender or bank will give you 75% of that towards your DTI. With the house you are purchasing being 2 hours from the other house then the lender or bank will be okay with that. But i would put the rental on the market. If your not making 25% profit on the rental a month its going to cost you in the end.
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