Are you tempted to buy a new home at today’s low prices and great interest rates but wondering what to do with your current home? The Tampa Bay real estate market offers an unprecedented buying opportunity.
Can you coordinate the purchase of a new home with the sale of a previous home to avoid a double-move?
Are you considering renting out your old home and buying a new one?
Changing Status Quo
If you are like most people, you just assume that financing will not be an issue because you have never had any problem qualifying in the past. If you will be financing the purchase, be advised that much has changed over the past twelve months.
Buy & Bail
If the new home is in the same area, there are some new issues to consider. After seeing people buy new homes in the same neighborhood for low prices, only to then allow the previous home to go into foreclosure, new regulations were enacted to prevent this “Buy and Bail” scenario (see BusinessWeek story). This premeditated foreclosure scheme is considered mortgage fraud. Government agencies and lenders have implemented tough, new guidelines to discourage Strategic Defaults.
Qualifying To Carry Both
You may still qualify to carry both homes as long as the PITI (principle, interest, taxes and insurance) and other recurring obligations (monthly debts) are below 45% range of gross monthly income. Lenders divide your gross income by recurring debts (including PITI on both homes) to calculate the ratio. Here are some example underwriting guidelines used by lenders.
Using Rental Income
Thinking about renting out your home and buying a new one? Do you need to use this rental income to qualify for a loan to buy another home? If you are counting on rental income from the previous home, you must document that:
1. the rental home has over 30% equity
2. you have six months of reserve funds in the bank
3. you have a formal a lease contract on the home
4. you have copy of the tenant’s deposit and first month’s rent
Lending rules are changing rapidly. The Premium Value Home Buying System and the TampaMoves Approval Department put you in the best possible position to find, negotiate and buy the right home at the lowest price. Contact Annette, Doug or Dale Bohannon at Coldwell Banker Residential Real Estate in Tampa Florida today to take the first step.
