Homeowners who want to buy a second home often face the dilemma of having two mortgages at once, even if it’s only a temporary situation. However, this increased financial responsibility often makes getting approved for a second loan more difficult than the first.
How can you have two mortgages at once? Here are the details that can help you purchase a second property among real estate listings.
1. Make Your Loan Contingent Upon The Sale of Your First Home.
If your income isn’t high enough to handle two mortgages for an extended period, your lender can qualify you based on a settlement contingency.
This means that your new mortgage is only valid if you sell your first home. This contingency has helped many homeowners upgrade to a new home that better fits their needs.
2. Have The Right Debt-to-Income Ratio
It’s also becoming more common for homeowners to hold onto their first home after buying their second one. In this case, you need to make sure that your debt doesn’t exceed 43% of your gross income.
In short, you’ll have to earn enough so that your income is large enough to handle your debt. Finding ways to increase your monthly income, such as getting a promotion or new job, can often make you more eligible for handling two loans.
3. Just Ask—You May Be Pleasantly Surprised!
If your income isn’t set to increase, don’t fret just yet. Many lenders know how to work with homeowners to make the purchase of a second home possible.
If you want to supplement your income in other ways like renting out your first home, you should speak with your loan officer to see if it’s possible to get approved if you become a landlord.
To find your second home today, contact us at Retter & Company Sotheby’s International Realty.