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Selling your Columbus Home and Buying “up” this year? Be aware
January 30th, 2009 categories: For Home Buyers, Mortgage/Finance
When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence — sell it, keep it, or rent it. Lately, we’ve seen a lot of what’s being called “accidental landlords” – those who couldn’t sell their home and are now renting it and have bought a new home.
Unfortunately, no matter which path they choose, move-up homebuyers in Columbus in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past.
Mortgage guidelines are dramatically tighter for people “carrying two mortgages”.
Among the changes this spring’s buyers face:
- Selling the primary residence
If you plan to close on your new home prior to the closing of your existing home — even if it’s only by a day – both payments must be listed as monthly debts on your mortgage application. This will disqualify the majority of homebuyers.Converting your residence to a second home
If your current home has less than 30 percent equity in it, your mortgage application for the new home will not be approved unless you can show 6 months worth of mortgage payments + taxes + insurance in reserves for the current home and new home combined.Converting your residence to an investment property
If your current home has less than 30 percent equity in it, any rental income derived from a tenant is disallowed on your mortgage application for the new home. You must still count the mortgage payment + taxes + insurance as a monthly debt.
In other words, being a move-up buyer isn’t as simple as it used to be. New lending rules make buying a new home an exercise in timing and financial planning. And the rules are expected to get tougher, too.
Therefore, if you expect to be a move-up buyer in the next 12 months, consider moving up your timeframe or — at least — planning ahead for it.
Understanding this crazy new mortgage landscape and how it can influence your upcoming purchase may be the difference between getting approved for a home loan, and getting turned down.
If you’re looking to move up this year, let’s talk.
Oxford MS Homes For Sale
January 30th, 2009
Being a Realtor in Mississippi I totally understand the mortgage brokers “tightening up”. It is a very big inconvenience with the “Selling the primary residence” a day before closing on your new one. In the past, people were able to do that all the time. May sun come out and warm you guys up! 6 degrees is not fun! As a fellow Realtor, I will say that Joe provides extremely useful information in his blog. That is a rare quality in 99% of Realtor’s out there.
Listen to him!
Blake Cannon
Logan Homes
February 2nd, 2009
So True. The fact that you have to be able to qualify for both homes independent of rental income is making quite the obstacle for people who are having trouble selling and want to rent out their house…
Alan Barker