Newbie Purchasing 2nd Home with Convential Financing

[Jen Turner]

First off, thanks for all the great info in this forum. I've learned so much in the short while that I've been a member.

I'm hoping I can leverage some of your expertise for my questions. I purchased my first condo in 2003 for $200K and refinanced the mortgage ($130K) a month ago so my payments are $900/month (including taxes). Condo is currently worth about $210K. I'm looking to buy another place that I will move into as my primary residence and rent out the condo (at least in the short term, waiting on a mass transit project to get completed before I sell it). I'm looking in the $250-$300K range, however, I don't have 20% to put down so I'm considering taking out a home equity loan for my condo to use as part of the down payment (wish I had considered taking out money when I did the refinance). Do you foresee any problems with doing this? I haven't spoken to my lender yet about it, thought I'd research my options beforehand.

Also, when the lender looks at my outstanding monthly expenses/loans, will they consider taxes on my condo mortgage or just the actual payment and interest? From the loan calculators I've looked at, it looks like I can qualify for a little over $250K. I've got excellent credit, steady job, no other debts besides the condo mortgage, and income is a little under $90K, however an additional $200/month in loans really makes a difference in what I could qualify for. I wasn't planning on using rental income on the condo to qualify (although potentially, I may be able to as it was a rental for the past two years, just recently moved back in).