Don’t sell your house, turn it into rent!
Website design By BotEap.comInstead of selling your residence to buy another home, you can decide not to sell your residence and convert it to rental property. In this case, the next home you buy and live in once again qualifies you for the lowest owner-occupied loan rate. This approach also makes it easier to make repairs to the rental home because, having lived there, you already know the tricks of how to fix things that normally need repair.
Website design By BotEap.comOne system I use is to refinance my residence about a year before I plan to purchase a new residence. This gives me enough money for a down payment on the next house I will buy. When I find a good repairman, I can buy it quickly. During the 3-4 weeks it takes to close the new house, I prepare the old house so that it is ready for rent. This generally involves some painting and landscaping. Then, before closing the new house, the “for rent” sign appears on the old house.
Website design By BotEap.comThe 3 steps of this technique:
Website design By BotEap.com1.) refinance your residence.
Website design By BotEap.com2.) Use the money from the refinance as a down payment to buy a new home.
Website design By BotEap.com3.) move into the new house and rent the old one
Website design By BotEap.comUsing this technique, you get the lowest “primary residence” interest rate for both your old and new property, since each property is your primary residence at the time you apply for the loan.
Website design By BotEap.comWhen I did my first refinance on a townhome I owned, I received a rate of 6.1%. The rate on my original loan was 7.5%. The original purchase price was $ 52,500 but the value had increased to $ 82,000 ten years later. He had also paid about $ 10,000 of the principal on the mortgage over the course of the ten years.
Website design By BotEap.comWhen refinancing, you should keep 20 percent of the home’s value in the home to avoid paying for private mortgage insurance and paying a lower interest rate. After refinancing the townhome, my monthly mortgage payments dropped from $ 535 per month to $ 518 per month, even after taking just under $ 20,000 for a down payment on the next home I bought.