All Forum Posts by: Nikol Catino

Hi @Nikol Catino, 

You might be able to pull this off, but it depends on a few factors.

Using your paid-off condo as collateral – If you mean taking out a home equity loan or HELOC on your condo to help with the purchase, that could work. But if you mean using it to back the new mortgage in place of income, most lenders typically don't do that. They primarily look at income and credit to determine if you qualify.

Income & loan approval – At $60K/year, your debt-to-income (DTI) ratio has to be within limits. For a $350K property, a rough estimate of the mortgage payment (with taxes, insurance, etc.) could be around $2,500/month. That's about 50% of your monthly gross income ($5,000), which is on the high side unless you have rental income from the house hack to help offset it.

Our minimum credit score is 580 for both conventional as well as FHA so so your 640 score should qualify.

On your future rental income – Some lenders allow projected rental income from a multi-unit property (duplex, triplex, etc.) to count toward qualifying income, but it usually needs to be documented through an appraisal with market rent estimates.

Since you have assets (your condo), you might have options like a cash-out refinance or HELOC to improve your buying power.

Typically we require two years of work history to pre approve, but if you have one year + were in school before, that could work. If you're interested feel free to reach out!

Never heard of it. Downsides off the top of my my head…

1) You’re going to need larger down payments. Many are going to have 20-40% equity which you’ll need to pay off. Even those who just bought a couple years ago are going to want more than 10% so after closing costs they don’t have to pay to sell. 

2) you’re probably going to be charged over market prices. The sellers are going to advertise their low rate as a reason they are charging you over market rates. But that’s basically prepaid interest. 

3) you're going to need good credit and and a good DTI, these aren't walk in and assume they're going to be qualify of assume.

4) you’re probably going to limit yourself to less than 1% of the market. What are the odds these are the best deals?

While I wouldn’t turn down an assumable mortgage. I’ve never seen it make sense. We have to much appreciation, causing too much equity and down payments in excess of 35%. Maybe in a stagnant or better yet a depreciating market you could catch an owner scared of losing what little they have left? Assuming you know it won’t continue to fall. 
  

If it’s free maybe you can post a couple deals you buy off it. But I wouldn’t advise you waste too much time on it. It’s something your realtor should be able to search for you for free without wasting your time. Good luck. 

you could do a DSCR loan on the condo and use those funds for the new property as down payment.

Happy to assist in getting you a DSCR