Posted on: 05th Jun, 2011 10:21 am
my father-in-law owns his home outright. he wants to refinance his home and use that money to purchase a home for us. (do to loss of jobs several years ago we had to file bankruptcy, we are now in a much better financial position, but obviously can not get a loan) we were told that he qualified for $200k based on 80% appraised value of his primary residence and debt/income ratio. we have found a home for $190k. now, our mortgage broker has told us that he only qualifies for $145k. we have tried almost every avenue to make this work (not willing to cash in our 401k/ira). last hope and my question is this...is it possible to do a home loan on his primary residence for $100k and then do a investor loan for $100k? the money will go to the second home (his investment home) therefore half cash/half investment.
If he owns two homes, then there's a possibility of a pair of loans too...but quite frankly, you lost me with that final question.
Where did the $145K come from? Is it based on income, credit, etc. or is it based on the appraised value of his home? That's a critical part of the equation, as a result based on income would clearly have an impact on what borrowing power he'd have on the other property.
Please define the "other" property - is it truly an investment property (income-producing) or a second (aka vacation) home? These things matter in determining loan opportunities for a borrower.
Where did the $145K come from? Is it based on income, credit, etc. or is it based on the appraised value of his home? That's a critical part of the equation, as a result based on income would clearly have an impact on what borrowing power he'd have on the other property.
Please define the "other" property - is it truly an investment property (income-producing) or a second (aka vacation) home? These things matter in determining loan opportunities for a borrower.
Thanks for your reply.
I know it is confusing, which is the reason I posted the question. Here are the answers to your questions.
The $145K is based on debt to income ratio. The appraised amount of his primary residence was twice that amount.
As for defining the home he wants to purchase for us, that is also confused because of the current situation. Basically he was going to do us a favor so we did not waste our money on a rental and we could call a place "home". In return, he would get the tax benefit. So, he was going to purchase the home with the cash he would receive from loan of his primary home. Thus, we would make the mortgage payments for him (with consideration to the differences in taxes and insurance). Again, he would receive the tax benefit. However, if he does a half primary home loan and half investment loan I assume that he will be required to show some proof of income, in which case we may or may not be able to accommodate, depending on the amount of income needed vs. mortgage payments (on both his primary residence and the "other" home).
This is not technically a second home for him, he will not live in the home, we are moving to a city 100 miles away from his primary residence. So it will be available for visits of course, but that is about it.
To reiterate, we will live in the "other" home, pay the mortgage on the "other" home and pay the mortgage on his primary residence, all directly to him.
I hope this information is helpful and has not confused the situation further. This whole ordeal has been a nightmare for us.
I know it is confusing, which is the reason I posted the question. Here are the answers to your questions.
The $145K is based on debt to income ratio. The appraised amount of his primary residence was twice that amount.
As for defining the home he wants to purchase for us, that is also confused because of the current situation. Basically he was going to do us a favor so we did not waste our money on a rental and we could call a place "home". In return, he would get the tax benefit. So, he was going to purchase the home with the cash he would receive from loan of his primary home. Thus, we would make the mortgage payments for him (with consideration to the differences in taxes and insurance). Again, he would receive the tax benefit. However, if he does a half primary home loan and half investment loan I assume that he will be required to show some proof of income, in which case we may or may not be able to accommodate, depending on the amount of income needed vs. mortgage payments (on both his primary residence and the "other" home).
This is not technically a second home for him, he will not live in the home, we are moving to a city 100 miles away from his primary residence. So it will be available for visits of course, but that is about it.
To reiterate, we will live in the "other" home, pay the mortgage on the "other" home and pay the mortgage on his primary residence, all directly to him.
I hope this information is helpful and has not confused the situation further. This whole ordeal has been a nightmare for us.
I think I comprehend what it is you are trying to accomplish - essentially you're really paying him rental income in a sense, and he's taking that money and paying the mortgages, in a sense, and getting the tax benefits therefrom.
You lost me with the "half primary and half investment" for a moment, but I believe I recovered.
You lost me with the "half primary and half investment" for a moment, but I believe I recovered.