Clueless

engaged731 · September 2011

DH & I have owned our townhouse for just about 5 years. At the time we did a 80/20 mortgage. We have been throwing around different options but we are not very educated in selling/refinancing/renting/etc. We are thinking if we can refinance our mortgage and get the monthly payment down that we would maybe rent our townhouse and use the money we have set aside as a down payment to a bigger house. What do we need to know about refinancing though?

car_ramrod · September 2011

If you did an 80/20 loan will you have enough equity to refinance? If you bought 5 years ago you probably bought at the top of the market. Do you know the loan to value amount? I ask because if you are planning on refinancing in order to rent you will not be able to do an FHA loan so you will have to pay down enough equity in order to qualify for a conventional refinance. It makes sense if you plan to hold onto the house to refinance since rates are so loan. It is definitely worth looking into. Worst case you are out the appraisal fee if you can't refinance. Just make sure your new mortgage allows you to rent it out (most conventional do) because if not they can call your mortgage due if they find out.

atlcatlover · September 2011

In addition to what pp said, keep in mind you will also have to qualify for both mortgages if you want to rent your townhouse and buy a bigger house. You will need to make sure you have plenty of money set aside for repairs on both places, as well as both mortgages in the even the townhouse isn't rented for a period of time.

Clueless

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