"I'll just call this old home a rental so I can buy a new home"
Good stuff, from Roger--experienced in the mortgage business, and interesting how he thinks out what some borrowers might be thinking... ;-)
In response to the growing number of "buy and bail" scenarios, lenders have implemented new rules when someone wants to call their old home a "rental" and use the rent income to qualify for a new one. If you can qualify for both payments with your income, then the following doesn't apply.
First, lenders have been requiring a 2 year history of managing rental properties in order to count rental income. This has been the case for several years.
Second, the lenders are now requiring you to have 6-12 months of verified reserves to pay the mortgage on your "rental" property.
Third, the lenders are requiring you to have a lease in place, and prove that you deposited the tenants rent and deposit checks. No vacant rentals allowed.
Lastly, Lenders are requiring up to 30% equity in the property considered a "rental". they have been requiring the borrower to pay for a new appraisal to prove they still have equity.
By doing this, they will cut down on the number of people who buy an new home and after closing, stop paying on the old home.
If this sounds like your situation, call me and I'll work the numbers and determine if you can call your old home a rental. Its better to know now than to put money down on a new home you can't qualify for.
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