11-21-2012 05:38 AM
I currently have a mortgage at 5.3% for a condo I bought in 2008. Thinking of refinancing to get a lower rate since it's in the low 3% right now. However, we are also looking at buying a larger home for our soon-to-be-expanding family and plan to buy within the next 12 months. We want to keep the condo as rental property since I'd likely lose money selling it right now.
Will refinancing my current condo mortgage affect my future mortgage on the bigger house?
11-23-2012 09:50 AM
The standard rule is that you intend to occupy with premise a a primary home for at least 1 year. I don't know if they would actually verify it but that's the standard rule for primary occupancy rates.
11-23-2012 10:19 AM - edited 11-23-2012 10:21 AM
I don't remember what the representation is for FHA and VA loans but for conventional loans you sign documents at closing stating that you will move into the house within 60 days and occupy it as your primary residence for 7 of the next 12 months.
In addition unless you have over 30% equity in your current place you will need to be able to carry both mortgages when you go to buy a new house. Many people are not looking to borrow the most that a bank is willing to lend so depending on what you wanted to do it may not have an impact at all. Banks typically approve debt to income ratios of between 40% and 55% and most people only want to borrow in the 30% range.
11-24-2012 06:12 AM
Do the refinance before you move out. The refinance will help get your next mortgage as your payments will be lower, this is what they look at when checking your expenses. You don't want to buy a new house the next day after you sign the papers but you don't have to wait that long, the length of time will be in the contract.
05-13-2013 06:02 AM - last edited on 05-13-2013 04:59 PM by audreylawrence
A change in interest rates probably has the greatest effect on whether people refinance or not.A refinance can save your cash on long-term interest, but refinancing frequently without considering the long-term costs is an expensive mistake.
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