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crzydiamnd · Joined: 09 Sep 2009 Posts: 2 2.20 Dollars($)

Ok, newbie here. I have couple of questions. I have a current home and wish to do several things in a relatively short period of time.

Facts: Current home needs about $10,000 in repairs and touch ups (fence, painting, insulation in attic, little landscaping). After, value approx. $125,000----currently owe approx. 70,000. Interest rate at 7%.

Facts: Want to purchase bigger home approx. $200-225,000. Income just over $50,000. Can make more with side jobs, etc.

Decision to make: Do I keep current home and rent out or sell? Current home will lease for more than mortgage payment easily with couple hundred left over.

My thoughts: I refinance current home and use some money to do repairs above. Also, maybe keep enough to cover closing cost on new home, etc.
Does this sound ok to you or would you suggest different method? I do not have to keep current home but would like to as investment if I can afford it.

JKennedySLG · Posted: Wed Sep 09, 2009 11:16 am Post subject:

Before making these choices you should see if you are able to qualify holding both mortgages based on your income and monthly debts. If you are able to qualify for the two, then you will face these questions. Let us know where the properties are located and I'm sure someone within the commnunity will be able to assist you. I hope this helps...

crzydiamnd · Joined: 09 Sep 2009 Posts: 2 2.20 Dollars($)

Both homes are located in northeast texas. I have no debt to speak of other than mortgage. I have a small credit card, about 700 could be easily paid off. Credit scores in mid 700's or better.

smithsussane · Posted: Wed Sep 09, 2009 11:08 pm Post subject:

Hi crzydiamnd!

Welcome to forums!

In my opinion, it would be better if you could sell off the property. Try to list the property in the market and check out if you can get buyers for the property. If not, then you should rent out the property. If you sell off the current property, then you would not be obligated to pay off the monthly dues. You will be able to clear off the mortgage once you sell off the property. Thus, when you buy the new property, you would be liable for paying off the new mortgage. If you keep both the properties, you would be liable to pay off both the mortgages.

Sussane

jveenstra · Posted: Thu Sep 10, 2009 10:00 am Post subject: Rent or Sell

With the new mortgage guidelines in effect, be careful.

It appears that you need the rental income in order to qualify for the new mortgage. If the refinace mortgage on your existing home ends up being over 75% of the value, you are not permitted to use the rental income to offset the mortgage payment. You then have to qualify for both mortgages on your income alone and must have six months reserves covering the mortgage payments.

Keeping and renting is not a bad idea, but, probabaly only works if the new refinance mortgage is less than 75% of the value of the house.

smithsara302 · Joined: 12 Jun 2009 Posts: 116 -2.38 Dollars($)

credit score in mid 700 is always better

eric1 · Posted: Sat Sep 12, 2009 7:22 am Post subject:

crzy

I am going the other way on this. If there is any way for you to keep the property, rent it out and then still qualify for your new home...then DO IT. Especially if the rent will cover or come close to covering your expenses on the first property. You will be building equity on a second property which is how you build wealth.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1731 35.55 Dollars($)

Thats really a good suggestion eric

the market will not stay like this for ever. If you cna rent it and hang on to the property for few more years probably prices will go back up and you may be able to make some profit if you wait

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refi current---then purchase new