Two Homes are Not Better than One!
From: Ann
Hi Carl,
Just found your site last month boy oh boy do I wish I had found it 6 months ago. This is our story...we sold our home that we had been in for 5 years last December in hopes of starting our dream home.
We bought a smaller more affordable home to stay in while we waited. In March we bought a lot and wanted to start the house... unfortunately the banks are telling us we need to sell the house we are in to qualify for the construction loan.
We don't want to sell right now due to the market and us having 3 small children to consider. The market is awful right now and we are just unsure of our next move. Any suggestions? Thanks
Hi Ann,
Unfortunately, one of the reasons the “market” is bad is that lenders have “tightened up” on their credit criteria for making loans. Had they done this a few years ago, the market wouldn’t be bad.
One of the major things lenders look at is your “dti”. “Dti” means “debt-to-income ratio. Your total monthly reoccurring debts divided by your total gross monthly income (all sources) = your “dti”.
Your lender, (as well as other Lenders) is afraid that you can’t handle two house payments, which is exactly what you’ll end up with if you finish building the new house and can’t sell your old house. This is NOT something you would want either.
You could look into renting your current house, take an apartment while you build, and then selling the rental “down the road” (or keeping it).
The rental market is “hot” right now and going to get "hotter".
Discuss this approach or other approaches with your current lender or another mortgage lender. Not all lenders are created equal. Shop for lenders like you do for anything else. If you have good credit, a good job, good income, and aren’t burdened with excessive debt (cars, jet skis, student loans, etc.), someone out there should be able to help you find a way.
Good luck,
Carl
Hi Carl,
Just found your site last month boy oh boy do I wish I had found it 6 months ago. This is our story...we sold our home that we had been in for 5 years last December in hopes of starting our dream home.
We bought a smaller more affordable home to stay in while we waited. In March we bought a lot and wanted to start the house... unfortunately the banks are telling us we need to sell the house we are in to qualify for the construction loan.
We don't want to sell right now due to the market and us having 3 small children to consider. The market is awful right now and we are just unsure of our next move. Any suggestions? Thanks
Hi Ann,
Unfortunately, one of the reasons the “market” is bad is that lenders have “tightened up” on their credit criteria for making loans. Had they done this a few years ago, the market wouldn’t be bad.
One of the major things lenders look at is your “dti”. “Dti” means “debt-to-income ratio. Your total monthly reoccurring debts divided by your total gross monthly income (all sources) = your “dti”.
Your lender, (as well as other Lenders) is afraid that you can’t handle two house payments, which is exactly what you’ll end up with if you finish building the new house and can’t sell your old house. This is NOT something you would want either.
You could look into renting your current house, take an apartment while you build, and then selling the rental “down the road” (or keeping it).
The rental market is “hot” right now and going to get "hotter".
Discuss this approach or other approaches with your current lender or another mortgage lender. Not all lenders are created equal. Shop for lenders like you do for anything else. If you have good credit, a good job, good income, and aren’t burdened with excessive debt (cars, jet skis, student loans, etc.), someone out there should be able to help you find a way.
Good luck,
Carl
posted by carl at
6:36 AM
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