All Forum Posts by: Derek Gardner

BiggerPockets, I need some advice!

I bought my first property (owner occupied) in October of 2018 when mortgage rates were much higher. I am house hacking by renting out two of the rooms. I basically pay $141, HOA, and utilities.

Because of my lower income, I co-signed with my parents. I was talking with my lender about refinancing to lower my payments and remove my parents from the loan.

   So, here's the information;

PITI: $1521 (including MI and HOA)

Refinance costs: ~$1000 (most lender fees waived)

New PITI: $1389

The new loan would be HomeReady so I can use rental income from roommates to help with higher DTI. My current goal is to buy a small multi-family with FHA, HomeReady, etc. as an owner occupied property in the next year. I have two options the way I see it. Sell my home and use the cash for down payment, or refinance and try to at least break even on rent and bank on appreciation.

Long-term, I'd like to keep my current home since it's in a great location that is growing and appreciating quickly. (However, I don't really like to speculate). Rents are relatively low compared to home prices at the moment. This would require a refinance that would still put me in a position where my estimates are right around the break even point.

This leads me to my questions.

1) If I refinance to a HomeReady loan, can I buy another property with FHA (or other low down payment owner occupied option)?

2) How does rental income (that we'll assume breaks even with the mortgage) affect DTI when I buy another small multi-family?

I'm personally leaning toward selling to avoid the DTI issue, but I want to see if I'm missing something or if there are any counter arguments.

Thanks in advance for all your thoughts and opinions!

-Derek (A new REI)