Buying a Second Home as a Primary Residence or Investment Property
Pittsfield, MA -- (SBWire) -- 05/14/2013 --Real-estate-yogi.com can provide some answers to that by sharing its knowledge on this subject, including:
- Renting Out the 1st Home
- 2nd Mortgages
- Traditional Mortgages
- Federal Housing Administration
Renting the First House
If a homeowner is planning on buying a second home and renting the first, there is information he needs to know. First, renting out the first home may have tax considerations if he makes a profit. Second, if he is not making a profit, he can write off the loss. Third, he can write off any repairs to the home. He may want to think about hiring a management company to ensure the renters are a good risk.
Getting a 2nd Mortgage
Getting a second mortgage is the first step in how to buy a second home. One will need to have lots of cash on reserve for repairs to the first house, and to pay the mortgage between tenants. He’s also going to require a signed lease from his new tenant before he can obtain a second mortgage. Be sure the lease is legitimate and shows a deposit from the renters when meeting with a lender.
Buying a Second Home as a Primary Residence or Rental Property - Apply Here and Get Instant Approval!!
There are stringent rules for homeowners who are renting out their first home while buying another one. If applying for a traditional mortgage, one must have 75% equity in the first home and a signed lease from a renter. He must also have 6 full months of PITI (Principal, Interest, Taxes, & Insurance) on hand for both houses. This may play into where the best place is to buy a second home because some areas are less expensive to reside in than others; one may not have to come up with as much PITI in a middle-class area as he would in an upper-class one.
If one is looking into FHA funding when buying a second home as a primary residence, he must know that, as of 2009, rental income eis no longer counted when applying for a new home loan. He must then qualify for both mortgages, and his debt-to-income ratio cannot exceed 41% for both houses. If he’s having difficulty with his ratio, he should pay down some credit card and other debt until it adjusts.
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