Hi Everyone,
I'm going to try to make this post as simple as possible so bear with me! I purchased a foreclosed townhouse a few years ago when I was single. I'm now married with a baby and we need more space! My home was appraised for $90,000. My outstanding mortgage loan balance is $45,000. I believe that means that I have $45,000 of equity in my home. After doing some thinking, I want to hold on to my townhouse and turn that into a rental. So now I'm wondering how in the world you go about purchasing a second home. Between my husband and I, we have approximately $10,000 saved for a downpayment. We'd like to repipe the townhome prior to having tenants in here since we have the old polybutelene piping which is cracking everywhere and that job is going to be approximately $5,000 to complete.
Is it possible to take out a home equity loan to do the repairs AND use the remaining monies to use as a downpayment on a new property? Is it possible to do a cash-out refinance on my townhome and use the extra monies as a downpayment on a new property? If I take out a home equity loan or do a cash-out refinance, can we STILL apply for a 2nd mortgage on another property or will that possibly block us?
As far as qualifying for the 2nd mortgage, I don't have a TON of concern about that... Our current monthly debts are as follows and given our monthly income, we have sufficient amount to cover the debt, plus a new mortgage:
Monthly Income (Gross) = $8000
Townhouse Mortgage = $400
Student Loans = $320
Credit Card Payments = $100
I'm wondering if anyone has ever been in this situation and what steps they took to buy their 2nd home. Also, the mortgage is solely under my name, not my husbands. We would be buying the 2nd property as a couple. Any input/advice would be appreciated!!
Thanks!
Dani
Starting Score (01/31): EQ: 609; TU: 641 EXP: 641
