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Member
Posts: 5
Registered: ‎08-31-2013
0

How would this be looked at?

We would like to purchase a different home next spring. This is our situation now:

 

Own current home (primary home) and have almost 50% equity. The loan is Conventional.

Own another home as a cottage. Fully paid for.

Own some acreage that we plan on building a retirement home on. MANY years away. lol Some equity but there is also a balance on the loan.

 

We have good credit scores. Around 700 at last check.

According to the DTI calculators we could afford a $250K loan with our current situation with the above properties and other debts.

 

I wonder if it be allowed to buy another property before selling our current house? If we had to sell our current house first but didn't find a new one I don't know where we'd stay. Especially with kids, cats, and a dog. After we moved we would put our current house up for sale.

 

We would be able to have 10% down for the next house if we can structure the offer to have the seller to pay closing. Which I think would be ok if we made a full asking price offer. Houses in the $200k range seem to take some time to sell around here.

 

Something else I read somewhere is that on a conventional loan if we were to put 10% down we could ask for 6% in seller concessions. I know FHA is 6 and usually conventional is 3 but with more down more concessions can be asked for. Is this right? Because if it is then we were thinking we could do UFPMI and have it paid for with seller concessions.

 

My head is spinning with so many questions but I think that's it for now!

 

Thanks!!

Member
Posts: 5
Registered: ‎08-31-2013
0

Re: How would this be looked at?

Anyone???

Community Leader
Super Contributor
Posts: 5,060
Registered: ‎03-06-2010
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Re: How would this be looked at?

I have never heard of 6% for seller consessions on a conventional loan - only FHA. If you can find that source and post it here, that would be a tremendous resource for buyers.

 

As to affording to purchase another home, the lender will have to calculate your ratios with all the properties you own. Since you didn't give income info its not really possible for us to determine. Any lender can calculate your ratios and tell you their u/w criteria without pulling your credit again.

Valued Member
Posts: 39
Registered: ‎05-18-2007
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Re: How would this be looked at?

I just bought a second home and I had to have 20% down. I have a conventional mortgage. The seller paid 3% closing costs.
Member
Posts: 5
Registered: ‎08-31-2013
0

Re: How would this be looked at?

[ Edited ]

Couple lender sites:

 

http://www.firstcommercefinancial.com/2012/12/07/what-are-seller-concession-and-how-they-help-when-b...

Conventional Loan Seller Concessions:

  • Primary residence/second home with less than 10% down = 3% of the purchase price.
  • Primary residence/second home with between 10% and 24.99% down = 6% of the purchase price.
  • Primary residence/second home with 25% or more down = 9% of the purchase price.
  • Investment property = 2% of the purchase price.

 

http://www.mapletreefunding.com/blog/2012/05/03/sellers-concession-breakdown/

  • Conventional Purchase – Seller’s concession limitations vary based on Loan To Value (how much money down the buyer is going to pay for the home).  Below is a breakdown that shows the LTV percentage and allowable Seller’s Concession:
    • 75% LTV and lower = 9% allowable Seller’s Concession
    • 75.01 – 90% LTV = 6% allowable Seller’s Concession
    • 90.01 LTV and higher = 3% allowable Seller’s Concession
    • Investment Properties Max is 2% if LTV is below 90%

 

http://www.findmywayhome.com/how-to-buy-a-home/using-seller-concessions-when-buying-your-home/

 

http://creditboards.com/forums/index.php?showtopic=455138

 

http://www.trulia.com/voices/Financing/Why_do_lenders_limit_the_amount_of_seller_concessi-329749

 

 

For DTI I used the calculator here:

http://www.credit.com/calculators/dti/#

 

Our current DTI is 10/19.

If we add a $200K mtg (PITI=$1262) our DTI would go to 24/34.

 

There's just so much information in so many different places online it's hard to pull it all together. I was waiting to contact a lender until we were closer to looking for our next house.

 

Thanks :smileyhappy:

 

ETA: This next house will become our primary house that we plan on moving into right away. I've seen people post about buying another house and keeping their current home for a rental but they didn't have to have 20% down. Our only difference is that we'll be selling our current house.

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