Posted on: 07th Jan, 2010 10:35 am
Hi. I recently accepted a job in a new area and would like to buy a home while the rates are low and incentives are offered. I own a residence in the area I moved from that still carries a mortgage and the value is approximately twice that. My question is if I lease it with option will the mortgage company I am attempting to gain financing with consider my other property as liability to my ability to repay a loan? Also, do I have to inform my current mortgage holder that it is no longer my principle residence? Thanks for your help
Yes. It will be considered a liability until it's completely out of your name. You can use 75-85% of the rent as income to reduce your monthly debt for approval purposes of your new home. Regarding notifying your current mortgage holder, there is no need.