Buying a second home

[rsg]

Hello.

I am considering buying a second home primarily to be in a better school district.  I need to know your opinions on whether I will be eligible for a second mortgage or if I will need to sell my current home. I just refinanced one year ago and planned to rent it out after I move.

FICO is 816.  I am a salaried employee and receive a W2.

Gross annual income is $127k (158k with bonus)

Current mortgage is $1530 with escrow, mortgage balance is 169k (2.375% at 15 years, 14 years left). Estimated current home value is 300k.

Student loan $545, balance 35k.

No other debt. Typical utility/grocery/gas expenses are about $1400/mo.

The price range of the new house is 450-500k and I will put 20% down.

Thanks.

[bdhu2001]

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@rsg wrote:

Hello.

I am considering buying a second home primarily to be in a better school district.  I need to know your opinions on whether I will be eligible for a second mortgage or if I will need to sell my current home. I just refinanced one year ago and planned to rent it out after I move.

FICO is 816.  I am a salaried employee and receive a W2.

Gross annual income is $127k (158k with bonus)

Current mortgage is $1530 with escrow, mortgage balance is 169k (2.375% at 15 years, 14 years left). Estimated current home value is 300k.

Student loan $545, balance 35k.

No other debt. Typical utility/grocery/gas expenses are about $1400/mo.

The price range of the new house is 450-500k and I will put 20% down.

Thanks.

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I'm in a similar situation.  Are you trying to get a second mortgage on your current home to finance the down pament on your new home?  If so, based on the property crash that we're just now climbing out of, they frown on that. They had too many people who would walk away from one or both loans.

If by second mortgage, you mean 1st mortgage for your new home, using liquid funds you have avaiable for the down, they can work with that.  However, how much rent will you receive for your current home?  Mortgage companies estimate that your home will be vacant 25% of the time.

Use the mortgage calculator on this site and calculate the new mortgage you can afford without renting your current home.  I'm pretty sure you're quite safe. But, If you aren't able to reach the amount you need without calculating in the new rent, then most mortgage companies will want proof of a renter in order to calculate the rental income, minus 25%, as income.

I'm sure you're already aware of this, but just in case:  most mortgage companies will pull your FICO mortgage score and credit report from all three Bureaus.  That score can be 30- 50 pts lower than your bankcard score.  For companies that pull all three, they'll use your middle score. To get the best mortgage interest rate, you middle score needs to be 740 for most companies and 760 for a few others.  

Shop for the best deal, because all the mortgage pulls, within 30 days, are considered 1 pull.  Use this site, zillow, lending tree, etc so that your information is out there without the need for you to call all the companies.  They'll call & compete for you.  Stop short of putting your social security number out there. They'll have captured your e-mail address and phone number and will call you without that information.

Oh, the interest rate locks only last for 30 days now instead of the 90 they previously lasted. So you have a very short time-frame to get everything in order and find a home once you get the ball rolling. But if interest rates haven't jumped up while you searced, that won't be an issue. Be sure to watch the points, and negotiate down the points if your score ends up being above 760.  Good luck.  Hope info was helpful.