Negative Assets

[wendyinoc_IHB]

So lets say you have a small condo and you bought it in 06. Now in 09 you decide to rent it out and buy a cheaper single family house. The condo is negative $100K. Would you still be able to get another loan if you showed your assets negative?? Just courious how this will impact people since we have not seen this in a long time.

 

[acpme_IHB]

if you were putting down 25% and you showed income that could support both loans, why not? i don't know but that's a great question. i find myself wondering the same thing... i have a condo thats i'd like to be a keeper but looking at SFH around 2010.

 

[jbatzmaru_IHB]

from my experience they don't look at the value of the loan. they look at how much you rent the place out and if it is positive or negative income. DTI. but the catch is say if you rent it out for 1k per month and your mortgage is 1k per month you have a negative cash flow of 300 dollars cause they only credit you 70% or so depending on the lending standard at the time. all this could change overnight so for now i know it is true cause i went though this whole situation getting my preapproval. i had to sell my car and pay off one of my credit card to get my DTI back into the green. going forward the DTI will be where alot of people will get trip up when getting their loan approve.

 

[biscuitninja_IHB]

<p>It depends upon a couple of things. </p>

<p>-How much you put down?</p>

<p>-How much can you rent it for?</p>

<p>-How much do you own in total each month?</p>

<p>etc. etc. etc. </p>

<p>But i think it all boils down to how much can you afford and if your DTI goes over 125% then you are in big trouble because you now have to take a 2nd and pay for it reguardless of how much you're renting it for.</p>

<p>You can also convert it to a rental property and start showing depreciation at the end of the year. It takes a little while to get all the depreciation out of the it, but it will certainly help. That is the way i'd look at it. So from there you have to ask youself if you can afford to make a year or two worth of negtative cash flow. Just be sure to use your end of year money to pay down the mortgage and save a few dollars for a rainy renters day.</p>

<p>good luck</p>

<p>-bix</p>

 

[flmgrip_IHB]

they often won't even accept the rental income as income until the unit has been rented out for two years, so be prepared that your income (without rental) is enough to support the old and new mortage... if that might be a problem, move out, rent the unit out and rent yourself for a year or two to show some rental history... a lease contract might be enough but don't count on it, depends on waht happens in the overal mortage market too...