Weird mortgage question...

[geecee]

I've got an old college buddy who wants to move but keep their current house as an investment/rental. He is currently in the midst of refinancing his current home (maybe a few more weeks to completion). However, his wife has seen another place that she absolutely loves and wants to put a bid in on. Can he get a mortgage for a new house while refinancing his previous place? Or would banks frown upon such a practice? TIA.

 

[RossMAN]

Ask Vic, one of the ATOT financial foursome :thumbsup:

 

[njmodi]

Shouldn't matter - the fact that he already has a mortgage on his old place will pop up on the credit report when he applies for his second mortgage. If he has the income to pay both loans, the lender doesn't care. I think rates differ on properties that are not your primary residence.

 

[kermalou]

SHOULDN'T BE A PROBELM

 

[Vic]

Originally posted by: njmodi
Shouldn't matter - the fact that he already has a mortgage on his old place will pop up on the credit report when he applies for his second mortgage. If he has the income to pay both loans, the lender doesn't care. I think rates differ on properties that are not your primary residence.

Correct. Except that it looks like this guy will try to do both properties as owner-occupied, assuming that he still lives in his current house (which it sounds like he does). So in this case he would not want the right hand to know what the left one is doing if you follow my meaning, as this is of questionable legality.
The big danger would be if the lender doing the refinance on his current property found out that he is purchasing a new property and intends to change his residence. Ideally, he should close the refinance on his current property first, then shop for the new home. If that is not practical, he should definitely make sure that the refi closes well before the new purchase.
When purchasing the new property, the debt ratios either work or don't work. The refinance on his current home shouldn't matter (assuming that he is refinancing to increase cashflow, as most people do, the refi should actually help).

 

[isasir]

Just make sure you use two diff't banks...

 

Won't matter in his current state. If he switches that other property to an income property and moves his primary residence, then things change.

 

[labgeek]

I recently looked at this... I have 2 houses right now, trying to get rid of 1 see my sig. But while looking at the refinance, the lender basically allowed me to keep it owner occupied as a 2nd home since 1)a relative is living there and 2) I'd be willing to state I'd spend at least 2 weeks there a year (going "home" for vacation was acceptable to them). Insurance didn't care as long as the house was occupied.

When buying the 2nd house, I was told it would have been easier to redo both of them as the same time, taking $ out of the first to put towards the 2nd, and paying off car notes. The problem was that the new lender doesn't do loans in my old state...

 

[geecee]

Thanks everyone. 🙂 I'll relay the info to him.