Are you thinking of upgrading from your first home to forever home? Or perhaps you’re simply looking to purchase a second home as an investment. Here are 4 commonly asked questions when preparing to upgrade to your next home.
Q: Can I keep my current home and rent it?
A: Yes, as long as the numbers add up. The lender on your 2nd purchase will want to see that rents you are collecting on current home will be 25% higher than the mortgage on current home.
Q: How much down payment do I need if I am no longer a first time buyer?
A: You can finance multiple homes with as little as 5% down once every 12 months up to 10 homes. ***As long as your DTI ratios are in line.
Q: Can I take cash out from my current home for my down payment?
A: If you have the income to purchase that 2nd property, but your down payment is tied up in the equity of your current home, you have 3 options to access cash from your current home:
1) Home equity line of credit
2) Cash out refinance
3) Sell the first home.
Option one and two will depend on your income, equity in current home, and debts. Make sure to consult with a mortgage professional.
Q: How do I calculate payment on mortgage for the second purchase?
A: Online calculators! Click here to access free mortgage calculator. Simply enter price of the 2nd home plus the down payment you want to invest. It can be as little as 5%.
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Watch: Can I Afford My Next Home?
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