Best Way To Set Yourself Up

[Nick Flint]

Hey BP'ers,

My fiance and I recently purchased a home in Tampa 6 months ago. The goal is to purchase another one about 2 years down the road and rent this one out. So what steps should we be doing in the meantime to set ourselves up to qualify for another loan/make this a smooth transition?

I asked my lender this same question and here were his answers, any additional tips or suggestions?

Combined income ~ $100,000/yr

Current mortgage (we put 5% down on 290k house) - $1,850/mth

Answers From Lender:

- Paying off more of my current mortgage? No, just make normal payments

- Or keeping more in savings for a new down payment? Yes, this will be to your benefit when buying a new home

- Refinance current house at a higher valuation to use that money for the new down payment? Probably won’t be an option that will make sense. The interest rate will most likely be higher than what you currently have plus you can only cash out to 80% of the appraised value so there really won’t be much equity to cash out..

- Renting out my current house first to show that income before looking at new houses? You can go under contract to buy a new home and use a new lease to offset the existing mortgage payment. Your current home does not need to be rented out prior to the purchase. Tenants can move in right after you would close on the new home.

[Caleb Brown]

Lender spot on. A few other things improve debt to income ratio and raise credit, this will give you more leverage.