Buying 2nd Property- Who should be primary applicant on mortgage?

[Account Closed]

My wife and I are about to purchase a new property and I am looking for advice on how to apply in order to secure the best interest rate possible.

Currently, we live in a house that is just under my name- I have not added her to this house because I had received advice that the purchase of a second home will result in a higher interest rate.

We will apply for the mortgage together, however is there any advantage to putting her as the primary applicant as a "first time home-buyer?"  Both of us have good income, good credit (780+) and we have a down payment of 20%.  

Additionally, we will rent out our current property- can expected rental income be factored in to offset housing ratio?  Or would a signed rental lease be enough for a lender to consider?

Down the road, our hope would be to set up an LLC once we have accrued several rental properties, but I do not think it would be beneficial at this time.

[Ben Rodriguez]

Hey Mitchell,

I would definitely say find yourself a mortgage broker who you can have an open, low stress conversation with.  I did this same thing in the past in Nashville and the primary reason we had our first house in my name alone was because I had the better credit and income at the time.  The way they look at co-borrowers was that whoever had the lower credit score would be who the lender would look at for making the call which could sour the deal.  Perhaps it would be better to have the second property in just her name because they won't be looking at debt to Income ratio on you in that transaction.  

I have also found that hypothetical income won't cut it.  Just because you are going to ask for a certain amount on your rental doesn't mean it will sustain when it comes to risk assessment, lenders (from what I understand) really like to see a history of income.

These are just the lessons I've learned which may or may not apply to you wherever you are looking to purchase.  

We were very happy with our broker and realtor, I always recommend developing a solid relationship with a few of your own, they will give you all the details of your situation and what will work for you at that point in time.  Hope this helps.