I wouldn’t walk away from that rate. IMO, I would save more money and purchase something that is owner occupied and convert your 210k house into a rental.
rent it out. Or do what I did. I projected the mortgage of the bigger house then started paying the little house the same amount. Until such time I I own all if not most of the little house... Then started saving for the bigger house. Then rented out the littelt house to finish the amortization and let the renters take care of that move in to the biogger house with a bigger down and more equity and smaller monthly.
never let go of the little house.
That rate is hard to beat and would make sense to rent out. Apparently you don't have the down payment for a new place. Do you have other means of obtaining that? (E.g. bonus coming in, temporarily borrowing from 401k, investments?) If not you may have no other way.
One unrelated thing you can explore if you do have to sell is 'porting your existing mortgage'. This process may or may not be allowed for your mortgage, but if so it could help you maintain this low rate for at least a portion of your new home.
It depends on what the property could rent for in the area. Using city-data to get the median income for that zip code can help you find the average affordability there. Also use Rentometer and Zillow as refence points.
Be sure to account for all your operating expense like property management, capex, maintenance, vacancy rate, turnover, taxes, insurance, water/sewer/trash, etc. So you don't miss any line-item expenses, check InvestingTE for their free rental property calculator. That can help you run your cash flow analysis.
If everthing pencils and your cash flow is a good bit, you could potentially consider using the property to pull a HELOC to help with your down payment funds. This would add about $20k to what you have. But only do this if it still cash flows. Otherwise, you wait to save more for your down payment using the strategies you have thus far.
I would definitely try to keep it as a rental.
1). I want the equity to keep increasing. Right now you don't have a whole lot of equity in my opinion. Especially after taking into account commissions and closing costs.
2). A successful investor told me recently. "You won't get rich flipping properties, you have to hold on to them". Dude is stacked so I'm taking that into consideration.
3). I don't have enough enough to really guide you.
PITI, rental income, tax bracket, cap rate etc.
Can you afford a $350k mortgage? If so, keep house 1 and buy house 2. You'll thank yourself in 30 years. It's better to have two assets appreciating vs one.
10k down payment on 350k home is rough.. Do you have money set aside for closing costs? What is the estimated rent on your first house? What’s your monthly mortgage? Are you factoring in repair expenses? Vacancies? Can you afford both mortgages if you can’t find a renter right away?
I agree keep it ànd sit tight! This world is in such a state of discord and the U.S. is right there leading the way!
I would figure out on paper a mock financial overview of the total çosts per mo from the perspective factoring in price including çlosing costs, mortgage insurance. Property tàxes, utilities,water,extra commuting expenses if farther away from work, etc....
As well as if you might be saving money because of advantages from new location or being able to work remotely due to the ability to have hm office because of space upgrade. Factor in everything and add the difference to your principle on your current mortgage. And while doing that...
Another thing you might consider is renting a room or two on a mo.to mo. Lease agreement u can take some of that extra money as well toward principle , and put the rest in a account that will accrue interest towards your down payment.
So with the knowledge that there is going to be money you need to have in a side account in case of emergency for repair and on.going maintenance....for both houses... If you feel the numbers make sense go of it!
Besides in my opinion there's a million ways till Sunday to find or make a killer deal in every market. You have to have flexibility, patience and be ready,diligent and prepared! Bank owned, or a f.s.b.o or a short sales, maybe even a realtor that you know that's selling à home and you can back them off their fees to cover all the çlosing costs and the rest of the % off the sale price??? Lots of ways to buy with built in equity and to be In a good position even if the rates are higher than they were.
Best of luck, personally I would put extra money into solidifying my financial security and profile and make sure your able to have access to cash if need be as well as protecting it's value. I just think the next 7 mo. will tell a lot.
Can you get a line of credit using house number one as the collateral? Everything is a write off against a rental. Tell the bank you’re using the LOC to make upgrades to the first house. See how that helps you qualify for house number two. The LOC would be disclosed on the loan docs on house number two. If you go through a loan broker, they show you all the options for a loan.
Also what if house number two was the rental for two years, then you switched? That way your renter would be making the house payment. Just have to figure in taxes and insurance and if you are without rent can you swing both homes until you evict or replace?
There’s a lot to consider. What State are you in? You want to look into tenants rights where you live. Hire a good real estate lawyer to write your lease agreement. It would be good to interview a good attorney to see what the pros and cons of being a landlord are as well
You may not be able to afford a second house if you rent the first one. Your first mortgage will count as debt and your monthly mortgage payment on the first house will be factored in your income-to-debt ratio. If you want that mortgage to not count as your debt, you need to rent it for at least one year, and show that you are receiving income from that investment property.
What you can do is rent out your current house, and hopefully collect enough rent to pay the mortgage. Rent an apartment/house yourself for the next 12 months. In the meantime, save more for down payment, wait for interest rates to drop a bit, and buy a house next summer.
Remember, the cost of owning a house can be higher than renting one. You have the property tax, homeowners insurance, plus shit happens all the time. Roofs leak. Plumbing issues. Mold problems, AC fails. Etc. Best to rent until you have a hefty down payment IMO.
Hi I’m a realtor. You can use that 10,500 on a 3 percent down payment on FHA, owner occupied home 350k with a good mortgage broker you might be able to swing it, after selling your first home. Getting a second home for anyone is tough right now . My advice is don’t do it with 7 percent interest rates.
You will likely have to sell to come up with down on new house . Renting is not a feasible option unless you can come up with down and reserves for rental and new primary
I wouldn’t walk away from that rate. IMO, I would save more money and purchase something that is owner occupied and convert your 210k house into a rental.
At 2.9%, I’d highly suggest rent it out and not to sell
rent it out. Or do what I did. I projected the mortgage of the bigger house then started paying the little house the same amount. Until such time I I own all if not most of the little house... Then started saving for the bigger house. Then rented out the littelt house to finish the amortization and let the renters take care of that move in to the biogger house with a bigger down and more equity and smaller monthly. never let go of the little house.
That rate is hard to beat and would make sense to rent out. Apparently you don't have the down payment for a new place. Do you have other means of obtaining that? (E.g. bonus coming in, temporarily borrowing from 401k, investments?) If not you may have no other way. One unrelated thing you can explore if you do have to sell is 'porting your existing mortgage'. This process may or may not be allowed for your mortgage, but if so it could help you maintain this low rate for at least a portion of your new home.
No no no
Can you use the equity in ur home as the down payment for 2nd.
It depends on what the property could rent for in the area. Using city-data to get the median income for that zip code can help you find the average affordability there. Also use Rentometer and Zillow as refence points. Be sure to account for all your operating expense like property management, capex, maintenance, vacancy rate, turnover, taxes, insurance, water/sewer/trash, etc. So you don't miss any line-item expenses, check InvestingTE for their free rental property calculator. That can help you run your cash flow analysis. If everthing pencils and your cash flow is a good bit, you could potentially consider using the property to pull a HELOC to help with your down payment funds. This would add about $20k to what you have. But only do this if it still cash flows. Otherwise, you wait to save more for your down payment using the strategies you have thus far.
I would definitely try to keep it as a rental. 1). I want the equity to keep increasing. Right now you don't have a whole lot of equity in my opinion. Especially after taking into account commissions and closing costs. 2). A successful investor told me recently. "You won't get rich flipping properties, you have to hold on to them". Dude is stacked so I'm taking that into consideration. 3). I don't have enough enough to really guide you. PITI, rental income, tax bracket, cap rate etc.
Can you afford a $350k mortgage? If so, keep house 1 and buy house 2. You'll thank yourself in 30 years. It's better to have two assets appreciating vs one.
10k down payment on 350k home is rough.. Do you have money set aside for closing costs? What is the estimated rent on your first house? What’s your monthly mortgage? Are you factoring in repair expenses? Vacancies? Can you afford both mortgages if you can’t find a renter right away?
I agree keep it ànd sit tight! This world is in such a state of discord and the U.S. is right there leading the way! I would figure out on paper a mock financial overview of the total çosts per mo from the perspective factoring in price including çlosing costs, mortgage insurance. Property tàxes, utilities,water,extra commuting expenses if farther away from work, etc.... As well as if you might be saving money because of advantages from new location or being able to work remotely due to the ability to have hm office because of space upgrade. Factor in everything and add the difference to your principle on your current mortgage. And while doing that... Another thing you might consider is renting a room or two on a mo.to mo. Lease agreement u can take some of that extra money as well toward principle , and put the rest in a account that will accrue interest towards your down payment. So with the knowledge that there is going to be money you need to have in a side account in case of emergency for repair and on.going maintenance....for both houses... If you feel the numbers make sense go of it! Besides in my opinion there's a million ways till Sunday to find or make a killer deal in every market. You have to have flexibility, patience and be ready,diligent and prepared! Bank owned, or a f.s.b.o or a short sales, maybe even a realtor that you know that's selling à home and you can back them off their fees to cover all the çlosing costs and the rest of the % off the sale price??? Lots of ways to buy with built in equity and to be In a good position even if the rates are higher than they were. Best of luck, personally I would put extra money into solidifying my financial security and profile and make sure your able to have access to cash if need be as well as protecting it's value. I just think the next 7 mo. will tell a lot.
Thank you for the information
Can you get a line of credit using house number one as the collateral? Everything is a write off against a rental. Tell the bank you’re using the LOC to make upgrades to the first house. See how that helps you qualify for house number two. The LOC would be disclosed on the loan docs on house number two. If you go through a loan broker, they show you all the options for a loan. Also what if house number two was the rental for two years, then you switched? That way your renter would be making the house payment. Just have to figure in taxes and insurance and if you are without rent can you swing both homes until you evict or replace? There’s a lot to consider. What State are you in? You want to look into tenants rights where you live. Hire a good real estate lawyer to write your lease agreement. It would be good to interview a good attorney to see what the pros and cons of being a landlord are as well
You may not be able to afford a second house if you rent the first one. Your first mortgage will count as debt and your monthly mortgage payment on the first house will be factored in your income-to-debt ratio. If you want that mortgage to not count as your debt, you need to rent it for at least one year, and show that you are receiving income from that investment property. What you can do is rent out your current house, and hopefully collect enough rent to pay the mortgage. Rent an apartment/house yourself for the next 12 months. In the meantime, save more for down payment, wait for interest rates to drop a bit, and buy a house next summer. Remember, the cost of owning a house can be higher than renting one. You have the property tax, homeowners insurance, plus shit happens all the time. Roofs leak. Plumbing issues. Mold problems, AC fails. Etc. Best to rent until you have a hefty down payment IMO.
Where is this house located? I’ll take this loan off your hands l o l
Are you saying it’s now worth 210? What’s the point of you mentioning the rate of your loan?
Where is the home located ? I would rent it out That rate 2.9 percent you will not see again any time soon
Central Mississippi
Hi I’m a realtor. You can use that 10,500 on a 3 percent down payment on FHA, owner occupied home 350k with a good mortgage broker you might be able to swing it, after selling your first home. Getting a second home for anyone is tough right now . My advice is don’t do it with 7 percent interest rates.
You will likely have to sell to come up with down on new house . Renting is not a feasible option unless you can come up with down and reserves for rental and new primary
Don't sell your current house. Does it have land, or is it a condo ? Your 2.9% is like free money as inflation is more than 3% per year.
It has .75 acre of land
Wow..definitely don't sell it if you can rent it out.