1056. Should you buy your next home before selling your current one, or is it safer to sell first? How does an existing mortgage impact your ability to qualify for a new loan, and where should your down payment actually come from? Host Laura Adams answers a listener’s questions about navigating the tricky logistics of moving and whether to convert her current house into a rental property.
Key Takeaways
- You can source your down payment from savings, home sale proceeds, a pre-arranged home equity line of credit (HELOC), or a short-term bridge loan.
- Carrying two mortgages at once counts toward a lender’s debt-to-income (DTI) ratio for underwriting.
- If you convert your primary home into a rental property, most lenders allow you to use 75% of rental income (backed by a signed lease) to offset your existing mortgage when qualifying for a new loan.
- A leaseback agreement allows you to sell your home, receive cash proceeds on closing day, and remain in the home as a tenant for up to 60 days.
- Holding two properties simultaneously usually requires higher credit scores and cash reserves.
- Consult a mortgage expert to calculate your exact borrowing limits under different scenarios before placing offers or listing your property on the market.
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Transcripts available at QuickandDirtyTips.com.
Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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