Skip to main content

We are possibly keeping our first home as a rental property and buying a 2nd home in a new city as our new primary residence. How does a second mortgage work?

My husband is a 3rd year medical resident in Minnesota and we might be matching into a new 3 year training program in Omaha. We’ll find out the match in March.

Considering our current town pretty much revolves around the hospital and most people moving here are medical residents coming here for training for 3-6 years, we feel like there is a strong rental market (of responsible potential renters who are basically never home because they work all the time in the hospital). Because we hadn’t planned to move in 3 years (my husband decided to switch specialities- thus the additional years of training), we are strongly considering keeping this first home and buying a new home if/when we move to Omaha in the summer.

Current home financials: In 2022, we bought a $260,000 single-family home at 4.38% on a 7 year adjustable rate mortgage- $50,000 down payment. Currently, we have $110,000 left on the mortgage. Actual monthly payment is $1375, but we pay $3000 to pay it pretty aggressively (because of the 7 year adjustable rate). We think we could rent it out anywhere between $1800- $2000 a month.

Income info to note: Our combined income will be around $110,000. Rental income could add roughly $21,000- $24,000 to this. We have baby on the way- due in May! I work from home in a pretty low stress job, so I plan to continue to work while taking care of baby with minimal childcare costs. My husband’s mom gifted us $70,000 when she passed away last year and we are considering using this either pay a big chunk of the remaining mortgage or use it for a future down payment on a second home. We also have about $300,000 in an investment account that was originally supposed to be a college savings account, but my husband never needed it because he got scholarships. We’d kinda like to not touch this money because it’s doing well invested, but we are open to using it for purchasing a second home. No other debt besides our current mortgage.

We have the ability to live with my husband’s dad in Omaha for the first few months, considering we’ll have to move two weeks after the baby’s birth, so we don’t need to rush buy a second home this summer. If we buy, we’re hoping to get to shop around for the best rate & and avoid the increase of summer-time home prices.

Questions we have: Should we just sell our current home and move on? If we do keep our current house as a rental and try to add a second mortgage, how do lenders approach a second mortgage- what do we need to know and/or ask? Is there any way we can get closer to our current 4.38% interest rate and avoid the 7%+ rates we are seeing these days? Should we use our investments to completely pay off our first house OR should we use them to pay off a big chunk of the second house?

submitted by /u/KaleidoscopeEven8804
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/1i5laur/we_are_possibly_keeping_our_first_home_as_a/
Labels:

Comments

Post a Comment

Popular posts from this blog

North Carolina – “One to Buy; Two to Sell”

I realize I will likely have to contact a real estate attorney but also hoping to hear insights and experiences from others! I have a house in NC that I bought by myself in 2009, and paid off, in full, in 2022. I got married in 2023. My spouse and I have not lived in the house as our "marital residence". We have maintained separate residences even after we got married. (That a separate topic!). I am now selling this house. Realtors have told us that my husband has to sign the deed at time of transfer but I am not convinced since the house has not been our marital residence. The realtors like to use the phrase "one to buy; two to sell", which seems like a broad-stroke statement which is not applicable under all circumstances. And of course, the realtors don’t realize the details of my specific circumstances: I purchased and paid for the house in full prior to marriage Only my name is on the deed And most importantly, we have never lived in the house as a marit...
Post a Comment
Read more

Aren't comps/CMAs useless with buyer credits at close happening now?

I'm looking into buying a new construction townhouse in my HCOL US city. I'm seeing builders offering interest rate buydowns worth $20k-$60k on $800k homes (rather than just lowering prices) in order to keep their comps high for their other units, now that buyer demand has been declining. I asked my agent about these, and he said these buydowns aren't even the full story: buyers can write all kinds of other credits into an offer, like their closing costs, prepaid sewer fees, etc. Apparently cash buyers can just write in a "buyer credit at close" for any amount in their offer. So a new townhouse that appeared to sell for $800k in the MLS might have actually been a cash offer with a $100k+ buyer credit at close, meaning the buyer only spent $700k or less in total, but to the rest of the world they can only see the $800k! So that made me realize I can't trust comps/CMAs for other new construction townhouses. The sales prices could be way lower than they appear...
1 comment
Read more

Co-signing as non-primary resident - effect on size of required downpayment & first time home buyer status?

Contemplating co-signing on a house with my mom and splitting the mortgage payment. I currently have a significantly higher income and much better credit than her. I'm looking at potential home costs and related downpayments but have difficulty using some of the online estimators. From my perspective, this would be somewhat of an investment purchase (I intend to stay in my current location in a different state and contribute to the mortgage), however, for my mom, this would be a primary residence. For purposes of the downpayment size and the type of mortgage arrangement, would it be an investment property or a primary residence? Many thanks for any help. submitted by /u/piercalicious [link] [comments] source https://www.reddit.com/r/RealEstate/comments/km4hvl/cosigning_as_nonprimary_resident_effect_on_size/
Post a Comment
Read more