| Posted by: Matt Oct 1 2002, 12:21 AM |
Hi,
My wife and I are buying a new home in Austin, TX. We've lived in out current house for 4 years. During that time the value has grown. The tax appraisal, which is supposed to be conservative, is $186K. A similar house on the same street (same model) sold in about 1 week last February for $182,500. We put out house on the market in April, and it hasn't sold.
Our current asking price is $175,900. So, as you can see, the market is not very good here right now. This is a very good neighborhood. The average home value here is about $220K and the next cheapest house on the market is about $200K. Our house is smaller than most at about 1700 sq-ft. I expect that the market will hit the bottom this fall and start to come back next spring. If we can sell the house at the current asking price then we will be happy enough. But, if the market is so soft now that we cannot get that much then we would probably like to lease it for a year or two until we can sell it for a more reasonable amount. We've got a fair amount of equity, about 45% on a 180K valuation. I think that we can probably get $1400-$1500/month in rent. That's the data, here are the questions:
1) I need to get some money out of the house to make the downpayment on the new one. I can probably swing it if the we take the LTV to 80%. Should I try to re-finance before we lease it or get a tenant first?
2) Do I need to get a special investment property loan? What kind of LTV do those typically require? We have good credit, about 650-700.
3) What do you think of interest-only loans? We found one that offers a 3.5% interest rate for the first year, with the rate increasing in ubsequent years. Since we only want to keep it for 1-2 years, this would seem to make sense to me. If this type of loan works then the expected lease amount is about $300 more per month than the interest + Tax + insurance.
Any help or tips are appreciated!
Thanks,
Matt
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