Here is the deal. I am moving 2.5 hours from my current location. I currently own a home with a mortgage right now. Unfortunately for me, I bought in 2006 at the peak and my home is worth about 18% less now, then when I bought. This was my 1st home purchase and I put 20% down. Obv once I sell, a huge chunk of my equity will be lost.

When i move, I would like to purchase another home instead of renting. The problem is, with the loss in equity from above, I no longer have 20% to put down. Is PMI my only option? (i have good credit fwiw)

Any tips/hints/suggestions?

Go find a mortgage broker. There are still products out there w/100% financing. 80% will be the 1st Mortgage and 20% will be an equity loan. (20% to avoid PMI)

A good MB will give you a host of options as credit is beginning to loosen up.

gl on the move.

If you're going to be 2.5 hours away you should talk to some property management companies before you consider renting out your current home. If you had to refi your current home as an investment, that interest rate now may be as good or better than a primary residence rate from 2006. Being able to float that house in hopes of prices going back up, so you don't lose all your equity sounds like a good option if you can swing it. As for current mortgages there are plenty of products out there with less than 20% down. You can even pay pmi up front in your closing costs as 1 sum instead of increasing your monthly payment. If you go that route just ask the seller for a lot of seller paid closing costs.

Are you eligible for a VA loan? If not, why do you hate your country?

I don't agree with renting it out. You may lose more and it's a pain in the ass to be a landord even with a mgt company. Think of the the tax headaches etc.

Land Contract?

 

Originally Posted by ggwscout

Are you stuck in 2004? That shit doesn't exist anymore. The only options in today's market for high loan to value financing is VA loan, (must have been in the service), FHA (an upfront funding fee and monthly mortgage insurance), and USDA loans (rural and income restrictions)

If you own another home and it doesn't have at least 20% equity, you must be ablt to debt ratio with both payments. Meaning you can't offset the old house payment with a renter. That rule was implemented because of the buy and bail folks.

You could not be more wrong. I was in a similar situation as the OP. Bought in 2007 and moved due to a job change. Rented for the first couple of years at my new location and have been renting out my old house since the move. Equity in your rental place means very little. It is all about income and credit rating. In addition, you are able to use rental income as part of your debt to income if the property has been rented for at least two years.

Rental properties are great for tax reasons, not a headache, depreciation is your friend. Plus you can write off just about everything and it comes off your top line income, before any personal deductions. Headaches come in with bad renters.

Also, there are a lot of mortgages out there now that do not require 20% down. I just closed last month w/ 10% down fixed at 3.625% over 20 years.(I could have put 5% down for a slightly higher rate) Granted, I have to pay PMI, but the $500 or so dollars a year for a few years is not a big deal to me. Take into account the bargains you can get right now and it more than offsets that.

finding a personal loan for the last 10% will be cheaper than paying PMI

 

Originally Posted by ggwscout

Are you stuck in 2004? That shit doesn't exist anymore. The only options in today's market for high loan to value financing is VA loan, (must have been in the service), FHA (an upfront funding fee and monthly mortgage insurance), and USDA loans (rural and income restrictions)

If you own another home and it doesn't have at least 20% equity, you must be ablt to debt ratio with both payments. Meaning you can't offset the old house payment with a renter. That rule was implemented because of the buy and bail folks.

 

Originally Posted by ben1234

You could not be more wrong. I was in a similar situation as the OP. Bought in 2007 and moved due to a job change. Rented for the first couple of years at my new location and have been renting out my old house since the move. Equity in your rental place means very little. It is all about income and credit rating. In addition, you are able to use rental income as part of your debt to income if the property has been rented for at least two years.

Rental properties are great for tax reasons, not a headache, depreciation is your friend. Plus you can write off just about everything and it comes off your top line income, before any personal deductions. Headaches come in with bad renters.

Also, there are a lot of mortgages out there now that do not require 20% down. I just closed last month w/ 10% down fixed at 3.625% over 20 years.(I could have put 5% down for a slightly higher rate) Granted, I have to pay PMI, but the $500 or so dollars a year for a few years is not a big deal to me. Take into account the bargains you can get right now and it more than offsets that.

Stuck in 2004? Really??? REALLY??? Did you just say something that stupid?

Listen, if you don't have something useful to add, then don't reply to a post. Your lack of knowledge about the subject matter shines brightly by your less-than-intelligent comments.

As BEN1234 said, "You could not be more wrong." Just for you benefit, go to Navy Federal Credits home page, follow the mortgage link, then go to the tab that indicates 100% financing and perhaps you can learn something.

As for the OPs position, you have tons of company. I bought near the peak and swim with the fish that are upside down. I turned my house into a rental property earlier this year and bought (upsized) with the purchase of a foreclosure house from the courthouse steps.

The rental is providing positive income and the tax benefits of depreciation (as mentioned by ben as well), in the end, should be a nice windfall, tax wise, in the future.

You don't have to be a rocket scientist to know the toughest nut is the tenant. One of the credit bureau has a service that, for $25 (as I recall), allow you to run a full credit check on the applicants if you choose to act as your own property manager. If you're at a distance and that is not feasible, then I think the going rate is around 10%.

 

Originally Posted by niptuck

I don't agree with renting it out. You may lose more and it's a pain in the ass to be a landord even with a mgt company. Think of the the tax headaches etc.

Land Contract?

Tax headache? Keeping your hard-earned money by taking advantage of current tax laws causes you headaches? I go see a new primary if I were you.

[QUOTE=ggwscout;6685192]

 

Originally Posted by Ugot2BKddn

Stuck in 2004? Really??? REALLY??? Did you just say something that stupid?

Listen, if you don't have something useful to add, then don't reply to a post. Your lack of knowledge about the subject matter shines brightly by your less-than-intelligent comments.

As BEN1234 said, "You could not be more wrong." Just for you benefit, go to Navy Federal Credits home page, follow the mortgage link, then go to the tab that indicates 100% financing and perhaps you can learn something.

Ya fucking douche, that is VA financing. Maybe your shit for brains, didn't realize that the Navy was part of the service, as I mentioned in my post. It is 1 loan, not 2 as you said. NO BANK IS GOING TO DO A 2ND MORTGAGE TO 100% IN THIS MARKET. PERIOD END OF STORY. IT IS SUICIDE. Most don't want to do a 2nd past 80% LTV. The housing market is still declining. Do yourself and the world a favor and choke on your own cock.

And to dipshit ben, of course it is about income and credit score. It is also about assets. If you can't put some skin in the game, its a high risk. It doesn't appear that he has been renting the home and claiming income on taxes on it for the last two years based on his post.

Renting is a headache, I don't care who your management company is or who your accountant is. SOme people like (or at least don't mind) the added responsibility of being a landlord. OThers do.

Look, one of my points about not renting is that there is a lot more hassel than simply selling the property. How can anyone argue that renting is less of a hassel than not renting?

Keeping receipts, meeting with accountant, meeting with management company, reviewing contracts, keeping a spread sheet, potentially having to evict someone someday, lawyers etc .... all of that can be difficult for some people and is a negative to renting. That doesn't mean renting is wrong for everyone but it is wrong for some people.

The bigger issue is the prediction of low to lower housing prices being a real concern and adding more losses on TWO properties now.

 

Originally Posted by niptuck

The bigger issue is the prediction of low to lower housing prices being a real concern and adding more losses on TWO properties now.

Agreed, being a landlord or rental property owner is not for everyone. The "extra" responsibility can be financially beneficial in both the short term..AND...long term. (Appreciation of property, that based on historically data, will occur)

Your last point make so sense. If property values continue to trend down (although, IMO, there is not more room at the bottom) it doesn't matter. You will not realize a loss until you sell the property, meantime, you are generating income to offset the mortgage. If you're so fortunate to be able to generate positive cash flow from the rental.... even a bigger bonus. Someone else paying the mortgage on your rental property.

The flip side of your coin... you now have TWO properties appreciating in the long term.

Sure..unless housing prices will never rise from the ashes... I am betting on the Sphinx.

 

Originally Posted by Quartersack

I went thru a large bank for my current mortgage. I since have been told to find a mortgage company outside of a large bank and I will get better rates? Is that true?

Yes, and that is why you want to find a mortgage broker.

Disclaimer: I'm not a mortgage broker and haven't played one on TV. I'm not in the military and have no affiliation to Navy Federal Credit Union, nor do I have a mortgage with such. Additionally, I have not been paid to endorse Costco or Walmart or even outback steakhouse.

 

Originally Posted by Ugot2BKddn

Disclaimer: I'm not a mortgage broker and haven't played one on TV. I'm not in the military and have no affiliation to Navy Federal Credit Union, nor do I have a mortgage with such. Additionally, I have not been paid to endorse Costco or Walmart or even outback steakhouse.

But have you stayed in a Holiday Inn recently? Thats the real question.