| >Purchasing Realty |
| Posted by: Guest_Brian Aug 17 2004, 03:41 PM |
| I am considering purchasing a home on a lake in Virginia near where I permanently reside. I have several questions concerning this. Basic background. Currently reside in single family home Appraisal value 240K owe 150K. Yearly income household 170K Debt approx 650 per month other than residence. Mortgage 1400/Mo 1. What method can I use to determine the amount/size of purchase I can make? 2. I hear all the time about people letting renters pay their mortgage and they enjoy the property on selected times of the year, How is this done? 3. I’d like to know if there is any advice one would give concerning this type of purchase. |
| Posted by: loanuniverse Aug 17 2004, 06:40 PM |
| Brian: 1. What method can I use to determine the amount/size of purchase I can make? This is a residential/consumer type of loan and is not my area of expertise, but I think that it would be looked at as a “second home” or “vacation home” loan. This means that some variation of the 28% / 36% rule will come into play. This means that debt service related to housing should not exceed 28% of your gross monthly income, and total debt service should not exceed 36% of your gross monthly income. The good news are that you have a high level of income. Assuming that your monthly income is $14,000 then: $14,000 X 28% = $3,920 You are currently using $1,400 for your primary residence this leaves about $2,520 for your second home. 2. I hear all the time about people letting renters pay their mortgage and they enjoy the property on selected times of the year, How is this done? You get the property listed with a management company or you can try to rent it yourself, but the feasibility of doing this depends on the amount of demand. There are even websites out there that can list your property. I would talk to a couple of agents in the area to figure out the demand. Good luck P.S: chances are you will have to pay a higher interest rate than the ones out there for primary residences. |
