Need advice on best way to leverage primary to get new primary

[Jase Machado]

My goal is to move out of my existing primary (my first and only home) and into a nice home and rent my old house.

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Here are the details:

-I'm in Northern California, both my primary and new primary will be in Northern California, Sacramento area.

-I currently owe 300k on my house valued at 700k. The current mortgage is at year 4 of a 15yr at 2.75%

-I want to move into a new house valued at 800-850k but don't have the down payment at the moment

-On the primary, My current mortgage (w/impound) is $3200 and I know the house will rent for $3500+

-The current primary still needs to finish a bathroom renovation and backyard fixing, so will take at least 3 months to be rent ready

-My income is over 300k for last years and my credit score is 800.

-Getting married in next few months, she is eligible for first time home buyer, might be expanding family.

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Current options I'm considering:

1.) Refi into an 'investment property" 30 year w/cash out to get my 10-20% down for the future primary. 

2.) Refi into an owner occupied w/cash out to get my 10-20%, stay 6 months, and due to life-changing event (getting married, baby), apply to get new owner occupied for new primary.

3.) Refi into a 15 year with cash out to get the 10-20%.

4.) Keep the existing loan and tap retirement etc to try to come up with the most 10% for the new primary

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My goal:

1.) Get into a bigger/nicer home in the next 3-6 months, get a renter with a 2-year lease.

2.) Live in the new home for at least 3-5 years, turn into a rental, move to new primary in Florida :)

3.) Possibly start to build a portfolio of high value rentals (each at 650k+).

4.) Understand if it would be best to go for low rates to minimize long term fees or shoot for maximum cash flow, considering goals above, timing on rates, and the potential shift of housing prices through an election year and uncertain economy.

[David M.]

@Jase Machado

trying for opt2 would be advisable over 1. But just from eyeballing the numbers, I’m guessing on a $300k salary you aren’t going to be able to carry two loans in your market as stated — since the rental income won’t be there, however much it cash flows.

How well does your fiancé do? You’ll need her income in the end. If you can “get”

Her income (assuming sizable) upfront, then run the numbers with a lender (let me know if you need a referral). See if you can afford to carry two primary mortgages. If not...

It becomes a bit tricky... if the current 15yr loan payments are screwing with your dti, cash out refi your current primary home for only just how much cash you need. If the 15 yr is okay, then maybe a second loan — but since you are paying for a loan a cash refi probably makes the most sense.

Now that you have some cash and the smallest allowable loan payment, your numbers hopefully will show that you can afford to buy your next house. Buy, move, fix up the old house, get it rented... now either refi once more to get whee you want to be, or just enjoy the extra cash flow.

Really, the bottom line is how do you get enough income to service the amount of debt you are going to be having. Lastly, is there a lender who will loan you on expected rental income vs having a signed lease (I haven’t personally done such a loan in a while)

I hope that helps. Let me know if anything is confusing. Good luck.