Buying a second home

[kixx9o5]

I currently own house with my dad with a $420,000k mortgage balance. I want to move out and buy myself a condo under $200,000k. I might even consider renting it out partially.

I have been having hard time getting a second mortgage for the condo. They are saying that I am fully responsible for $420k if my dad can't pay the mortgage so that adds to my debt service ratio. I don't want to get a co-signer.

I have 20% downpayment ready . I make $70,000 salary. 750+ credit score and $10k in student loans.

Are there anyways of going around this without taking me off title of first home?
Does anyone know of any private lenders or financial institutions who can work with me?

Thanks in advance

[sslinn]

No lenders will take on that risk.

You will either have to come off title on the other property or have your father purcahse the condo with you.

[sslinn]

My apoligies I didn't read about the private lenders. You may fine one that will have a higher TDS but the interest rate will be 3 - 5 points higher.

Call a broker and see what they can do for you.

[chenwaa123]

I currently own house with my dad with a $420,000k mortgage balance. I want to move out and buy myself a condo under $200,000k. I might even consider renting it out partially.

I have been having hard time getting a second mortgage for the condo. They are saying that I am fully responsible for $420k if my dad can't pay the mortgage so that adds to my debt service ratio. I don't want to get a co-signer.

I have 20% downpayment ready . I make $70,000 salary. 750+ credit score and $10k in student loans.

Are there anyways of going around this without taking me off title of first home?
Does anyone know of any private lenders or financial institutions who can work with me?

Thanks in advance

Just a side question. If you have 40K for a down payment why don't you get rid of the 10K student debt first? Isn't that debt a higher interest rate, or have you worked out the numbers to your benefit?

[newgame99]

I would concerned about getting rid of your student loan.

[aidan24]

I would concerned about getting rid of your student loan.

He obviously wants to avoid any CHMC fees and may not have another 10K cushion.

You can draw up a lease stating that your father or another family member/relative are renting the place. Ensure that the rent is an amount that is greater than the mortage payment. This can help lower your GDS/TDS by increasing income. I have heard that some banks will only consider 50% of your rental income as an incremental increase to your income.

This may seem shady to the naked eye, but in actuality, the OP is likely not paying the entire mortgage on the first property, etc

[ralphyr]

He obviously wants to avoid any CHMC fees and may not have another 10K cushion.

You can draw up a lease stating that your father or another family member/relative are renting the place. Ensure that the rent is an amount that is greater than the mortage payment. This can help lower your GDS/TDS by increasing income. I have heard that some banks will only consider 50% of your rental income as an incremental increase to your income.

This may seem shady to the naked eye, but in actuality, the OP is likely not paying the entire mortgage on the first property, etc

Having a lease is one thing, but wouldn't a bank want to see a history of rental income on that property too?

[aidan24]

Having a lease is one thing, but wouldn't a bank want to see a history of rental income on that property too?

Some banks can request that. But judging by what the OP says, decent income, 20% down, excellent FICO - a good mortgage broker will make the mortgage on the second house a walk in the park.

[sslinn]

Hopefully that walk in the park does not involve fraud.

It appears that what is being suggested here.

Tread carefully.

[Cypherus21]

Assuming you want to keep your title on your share of the first home while you live in a new condo, you may be setting yourself up for a large income tax bill in the future.

That is, while the new condo, if you do get one, becomes your principal residence (based on your intention), and is thus subject to the primary residence capital gains exemption, the first home becomes a second home to you that is no longer under exemption. Therefore if you and your Dad dispose of the house in the future, you will have to pay 50% of the taxable capital gain (.50 x (Fair value of home - cost of home)). Judging by your high mortgage share, this can be a large tax bill for you. Perhaps having your Dad by you out, even under annual installments, to remove your name off the title is a way to avoid future capital gains taxes to you (including your share of property taxes). Just another facet to consider under your decision

[sonypcs]

Go thru a mortgage broker and see if they can arrange some white label, foreign banks or exotic lenders for you...Dont walk to the bank and ask them if you are qualified or not..because the answer is "I am sorry, you wont be qualified...!!!"

[aidan24]

Hopefully that walk in the park does not involve fraud.

It appears that what is being suggested here.

Tread carefully.

It is not fraud as long as the OP really has someone else paying the morgage.

It seems as if he wants to move into a condo and his family will be staying at the original house. If this is the case, he actually does have rental income that covers the mortgage. Therefore, if he draws up a lease that lists who is actually paying the mortage, this will help his cause.

[sslinn]

It is not fraud as long as the OP really has someone else paying the morgage.

It seems as if he wants to move into a condo and his family will be staying at the original house. If this is the case, he actually does have rental income that covers the mortgage. Therefore, if he draws up a lease that lists who is actually paying the mortage, this will help his cause.

The only mention of family, is his dad who also owns the house.

[kixx9o5]

It is not fraud as long as the OP really has someone else paying the morgage.

It seems as if he wants to move into a condo and his family will be staying at the original house. If this is the case, he actually does have rental income that covers the mortgage. Therefore, if he draws up a lease that lists who is actually paying the mortage, this will help his cause.

Well a mortgage broker advised me that some lenders require fire dept and the city to confirm that my parents house is retrofitted for rental and some lenders done care. But I am now thinking of the tax implications of what the previous poster has mentioned.

I'll update as soon as I get new info.

[kixx9o5]

Assuming you want to keep your title on your share of the first home while you live in a new condo, you may be setting yourself up for a large income tax bill in the future.

That is, while the new condo, if you do get one, becomes your principal residence (based on your intention), and is thus subject to the primary residence capital gains exemption, the first home becomes a second home to you that is no longer under exemption. Therefore if you and your Dad dispose of the house in the future, you will have to pay 50% of the taxable capital gain (.50 x (Fair value of home - cost of home)). Judging by your high mortgage share, this can be a large tax bill for you. Perhaps having your Dad by you out, even under annual installments, to remove your name off the title is a way to avoid future capital gains taxes to you (including your share of property taxes). Just another facet to consider under your decision


Hows the impact, if I still claim my principal residence (home) and the condo as (rental investment) assuming I sell the condo in 3 yrs what tax implication does that have? Is it more tax advantageous to claim it this way?

[sslinn]

You will pay capital gains on the condo when you sell it.