Buying A Home
fhorns147
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Want to buy a 2nd home and rent out the 1st
My husband and I live in a one-bedroom apartment that we own. We would like eventually buy a house and rent out our current home because we feel we can make more of a profit that way than selling it. The trouble is we spent almost all of our savings on the down payment for the apartment so if we don't sell it would take us a very long time to save up 20% for a new home. (20% for the houses in our area means about $100,000.) What sort of effect would our plan have on our ability to get a good mortgage? I'm assuming there's no way to get around the rule that requires extra insurance if you don't have a 20% down payment. Does anyone have any other strategies for our goal? Or is it not worth it and should we just sell?
Re: Want to buy a 2nd home and rent out the 1st
My home is not underwater, but by my estimate we would still have to save another $20,000 or so to reach 20%.
They do have conventional 30 year fixed loan with 5% down. And yes, you would have to pay PMI.
I just read about someone getting a 5% conventional on another forum. I stand corrected!
When you apply for a new home loan, they are probably going to count the fact that you have no long term rental history on your apartment against you. Not all of the rental income that you receive from the apartment will not count toward your income when determining your debt to income ratio. They are going to take into consideration vacancy rates and the lack of rental history when they determine how much of the rent they will count toward your income.
I could have wrote this myself! We are in NJ and we bought our home for $300,000 in 2005. We put down 60,000 and now we owe 214 on our home. Homes in our neighborhood are selling for 200,000. Meaning we'd owe 14,000 and we'd have to pay closing costs and realtor fees in addition to needing 20% down for a new place. Impossible for us to save.
Soooo we are thinking of renting out the first home so we aren't "in the red" and need to come with 30,000 or so to get rid of our home. If we can rent it for 1600 per month, it would cover our mortgage and some of our taxes and we'd have to put about 400 per month towards it (we may also refinance). Then once the market is up we could continue to keep it (hoping rent would one day go up) OR we could sell it.
So we are looking for a 400,000 house - we are pretty sure we'd be approved for about 600,000 - 800,000 based on our income. So 400 + our 200 1st house would work out.
We have a realtor coming over to discuss our options. We also are calling our lender to see where refinancing would get us. We are going to write out our options (add on to current place and keep it, sell our house, rent it out, rent a bigger place, buy a new place, etc) and pros, cons, how much we think it will cost and then go from there.
Good luck!