| Posted by: Kris Oct 12 2002, 04:19 AM |
I would like to see what options, if any, are available for the following:
Can I take the equity from my current home to use as a down payment on another home and change the status of my current home to non-owner occupied and rent/lease the property?
What guidelines are there for such a process? What type of credit score would be required?
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| Posted by: loanuniverse Oct 12 2002, 10:52 AM |
Most of the lenders in residential property sell the mortgages in the secondary market, which means that they are looking for the same type of loans so they can be all grouped together and sold. Unfortunately for you this means owner occupied primary residence loans. On the other hand, if you were to refinance your house with the full intention of keeping it as your primary residence and then decided to rent it out. I don't see much of a problem there. Please take into consideration that I am not suggesting that you lie on your mortgage application. That's a federal offense. But if you happen to change your mind, well, that's another story. It would have to come to a matter of timing.
Regarding the kind of credit score needed for a loan. Credit Score will affect pricing more than anything else. Although is true that a lot of banks will give loans only if you have a particular score because the "investor" requires that minimum to buy the loan. There are other banks and financial institutions that have several types of programs tailored to different levels of credit score. I could not give you a specific number since I don't deal with individual request that much, but keeping your score over 700 is always good.
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| Posted by: Preston Dec 13 2002, 02:51 PM |
| I was wondering if there is 100% financing available to buy rental property specifically a 3 apt house? The best I have seen is 90% at a local bank. Thank you. |
| Posted by: loanuniverse Dec 13 2002, 03:52 PM |
QUOTE (Preston @ Dec 13 2002, 02:51 PM) I was wondering if there is 100% financing available to buy rental property specifically a 3 apt house? The best I have seen is 90% at a local bank. Thank you.
Hello Preston:
Finding a bank to provide 100% financing would be an impossible task. The only way something like that could happen would be if the bank was trying to avoid a foreclosure situation or you happened to have a long-standing relationship with the institution. Even if you had a long-standing relationship with the bank, they will probably ask you to tie this 100% loan to other loans to mitigate the weakness.
Your best bet would be to:
Get a loan with a finance company / not a Bank This will also be difficult as they are a bit more….. what is the word I am looking for….. predatory than your regular Bank. You might have to contact several companies in order to find out one that would agree to funding the loan and frankly I doubt that you will be successful.
Get the seller to agree to a second mortgage This way the bank can provide a loan that will keep it under its loan-to-value guidelines. Having a first and a second mortgage on the property means two payments, but if the rental income is enough, this might be doable.
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