Long Term Rental by assuming loan; risky idea?

[Jared Schott]

Hi folks I previously posted about a 5 bed 4.5 bath house for sale at 590,000 and has been up for 60 days. This house has an FHA loan that I can take over and all in it'll be 2k/month. however, the amount left on loan is 310,000 at a 2.75% rate. so, if I did 590,000-310,000 I would have to come up with 280,000. I could probably get it for cheaper but just for now I want to see worst case scenario.

This means I would take over the loan and pay 2k/month on top of needing to come up with 280k. I am currently not making much income however next year I will be making 70,000 and it will grow from there. I do not have that much cash sadly, but I was curious what your guy's thoughts are on financing that amount. could I get a decent loan for it? is balloon payment a valid idea due to my increase in income in the coming years?  I am open to any and all advice. Thank you! 

Also, it is a new build, so maintenance is going to be minimal 

Rent Numbers:

I can rent the house out for 2800/month conservatively (maybe 3k)

Loan Details: 

mortgage remaining: 310,000

FHA matures 10/1/2050

rate:2.75%

asking price:590,000

[Ty Coutts]

Hello Jared Schott, regarding your situation, here are some considerations and options for managing the $280,000 gap: 

Second Mortgage: You can seek a second mortgage or home equity loan to cover the $280,000. This will be subordinate to the existing FHA loan, but you'll need to qualify based on your credit score, income, and debt-to-income ratio.

Home Equity Line of Credit (HELOC): A HELOC could also be an option, offering flexibility in how you draw and repay funds, though it might come with variable interest rates.

Balloon Payment Loan: This type of loan can offer lower initial payments with a large lump sum due at the end of the term. Given your expected income increase, you could refinance or pay off the balloon payment when it comes due. However, this carries significant risk if your financial situation doesn’t improve as anticipated.

I hope this helps, and this is just the tip of the iceberg when it comes to mortgage loans. Feel free to message me for more information if needed, I am happy to help!

[Jared Schott]

Quote from @Ty Coutts:

Hello Jared Schott, regarding your situation, here are some considerations and options for managing the $280,000 gap: 

Second Mortgage: You can seek a second mortgage or home equity loan to cover the $280,000. This will be subordinate to the existing FHA loan, but you'll need to qualify based on your credit score, income, and debt-to-income ratio.

Home Equity Line of Credit (HELOC): A HELOC could also be an option, offering flexibility in how you draw and repay funds, though it might come with variable interest rates.

Balloon Payment Loan: This type of loan can offer lower initial payments with a large lump sum due at the end of the term. Given your expected income increase, you could refinance or pay off the balloon payment when it comes due. However, this carries significant risk if your financial situation doesn’t improve as anticipated.

I hope this helps, and this is just the tip of the iceberg when it comes to mortgage loans. Feel free to message me for more information if needed, I am happy to help!

 I would absolutely love to talk. I am very green when it comes to creative finance/options. I'll pm you on here right now. thank you!!

[Ty Coutts]

Sounds great. Give me a call whenever so that we can discuss further. My cell is below, have a great day!