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what to do

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vic
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Posted: Fri Jul 28th, 2006 10:30 pm

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Do not take a 100% finance and keep your rental free and clear. Rent income is taxable. Taxable rent income can be reduced by property taxes, insurance and most importantly mortgage interest. You can get a home equity loan on your rental-to-be. Say the home is appraised at $400K, and you take a $300K loan which is ok since it is 75% LTV. You can get a home equity loan with zip application and closing fees. Now you have lowered your taxable rent income. Maybe you make a rental loss and even get a nice tax refund at the end of the year, depending on your AGI.

The $300K that you took out of your rental-to-be can be used for a down payment on your next house. You will only have to finance the difference and you will avoid PMI payments with this large amount down.

When we had our homestead free and clear, we bought another house cash with the home equity loan cash out. We fixed this up with other funds. This way we avoided all mortgage closing costs.

Vicky

pitbull62
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Posted: Fri Jul 28th, 2006 04:00 pm

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Thanks for the reply. What type of loans should i be looking for? Any other creative ideas out there? Just looking to hear what different investors would do

Last edited on Fri Jul 28th, 2006 04:01 pm by pitbull62

MortgageHelp
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Posted: Mon Jul 24th, 2006 09:21 pm

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In order to hold on to the existing home and rent it out, you will need to hande the debt.

Unless your credit is good enough for stated income mortgages, you can only count 75% of the rental payments toward your income.

As far as whether or not to hold on to it - I would say absolutely yes (unless major repairs are due, structural problems, etc.). There is no better investment than real estate.

But usually in your case its a debt ratio issue. Can you afford to deal with taxes, insurance, maintenance, etc. should the property be vacant for a long time.

Hold on to it if you can.

pitbull62
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Posted: Sun Jul 23rd, 2006 07:16 am

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hey all, im new to the forum. I own a home which is paid free and clear. its approx worth is 370k-400k. I wish to buy a newer, bigger home on the market for 600k...what would be the best way of doing this. ive been told to rent out my current home and 100%finance the new one.....any ideas???thanks in advance.....Rob

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