Can you have two mortgages on two separate properties; one 15 year and one 30 year?
I currently have a 15 year mortgage on my primary property. I would like to buy a house for a rental property but with a 30 year mortgage. Can I have two mortgages on two separate properties at the same time? If so can I have one as a 15 year and one as a 30 year?
Tags: Mortgages, properties, Separate, Year
Yes, you may have two mortgages if the bank will extend the second based upon your qualifications. Since the second will be a rental, you will most likely need the full 20% down to qualify, plus adequate income.
yes you can carry two mortgages at the same time on the same or different properties. It will depend on the value of the second home, but some banks want some of the collateral that is built up in home A to be used in case you don’t pay off home B? when you go to the bank to ask for a loan, be sure to cite that you have successfully paid on Loan A and now want a lower interest rate for loan B.
The mortgage on the rental property will be a commercial mortgage, not the same as a residential mortgage, which is only available for the property you actually live in. Therefore, you will need at least 30-35% cash down, plus closing costs, plus reserves. You will need 3 years of actual financials from the current owner, plus your pro forma projections for the coming 3 years. You are very likely to be limited to 15 year term. And the interest rate is considerably higher than for owner-occupied residential mortgages.
Remember rents are dropping in many areas of the country and vacancies are rising. It seems that while many people are losing their homes to foreclosure, they cannot afford to rent either! People are doubling and tripling up with other family members – oodles of “bounce-back kids,” adults who have been independent for years (or away in college) moving back in with mom & dad. You will need to do your projections with a 10% vacancy rate, more if vacancy rates are rising in your market. With a glut of housing and rental properties on the market, and rising vacancy rates, it will be very tough to get a commercial mortgage.
Now if you were going to be moving into another house and keeping the old one with its existing mortgage as a rental property, you might have a better chance of getting a residential mortgage, if you have at least 20% down, a very secure job(s), all closing costs, and 3 – 6 months of reserves. They will discount the income from renting your existing home, but it still will boost your income in the mortgage calculations.