Comments on: Buying a second house?

By: mazziatplay

mazziatplay — Tue, 29 Jun 2010 10:55:58 +0000

Guidelines for loan qualification in relation to rental property specify that you be credited for only 75% of the rental amount less the mortgage payment, property tax installment and home owner’s insurance installment. Any remaining rental profit is credited to your income for qualifying purposes. Any negative rents using that calculation are counted as a monthly debt for qualification purposes.

If you are buying a primary residence your mortgage interest rate will not be impacted by the fact that you own a rental nor should your costs in getting financing.

The only potential negative impact could be that the negative rental amount precludes your ability to qualify for the loan on the new home.

By: jamie5987

jamie5987 — Tue, 29 Jun 2010 10:55:58 +0000

It depends on your credit rating. I bought my current house without having sold my first house, so I owned two homes for a while. My mortgage company worked with me to swing the deal plus I got a great interest rate. But then, I have excellent credit.

By: christigmc

christigmc — Tue, 29 Jun 2010 10:55:58 +0000

because you already own a home, even though you don’t live in it, your interest rate will be slightly higher.

By: bostonianinmo

bostonianinmo — Tue, 29 Jun 2010 10:55:58 +0000

If your credit is clean, most lenders will treat the rental as a wash. The won’t give you any allowance for the rental income, but won’t include its mortgage in your total credit either.

Have done this a few times. Never an issue. The lender just wanted to see a few years worth of tax returns to substantiate the income and expenses.

Contrary to what the above poster said, it shouldn’t affect your interest rate — and if you have a lot of equity in the rental it might even lower it slightly.

By: ~Trey

~Trey — Tue, 29 Jun 2010 10:55:58 +0000

Techzone12,

mazziatplay has nailed it on the head.

Good Luck,
~Trey