Client calls, wants to buy a new home, and rent out their current home that they are upside down in.
As the lending rules stood, they had to absorb their current mortgage payment into the equation of qualifying for a new loan and the rules precluded them from using the rental income to offset the mortgage payment. Given that, most could not qualify. You lost a buyer. That has been the tale time and again for many agents nationwide .
I hope you saved that contact because things are changing.
Starting August 15th if your buyer is upside down in their current home, they can now offset their current mortgage payment with a lease and evidence of a security deposit on their existing home. Also being pushed to the side are the high reserve requirements put on borrowers vacating their current primary for a new home which were tallied at 6 months PITI on both properties.
Previously if you had less than a 30 % equity stake in your current primary you were forced, in most cases, to eat the full payment and take the hit on your debt ratios for the new loan. The rule was the byproduct of the 2009 meltdown and was called the Bail Rule. The recension of this rule is one of the first major loosening of guidelines since 2010.
Tony Marra is a Team Lead of Marra & Company with Bay to Bay Lending and specializes in Conventional, FHA, VA, and USDA loans. We can close loans in 2 weeks.
Please contact him directly if you have any questions on this or other loan scenarios. Bay to Bay Lending is a direct lender based in Tampa, Florida.
Anthony Marra NMLS 3431102
Bay to Bay Lending NMLS 4102