We have a condo that we want to mortgage because we want to buy another condo for our son. Can we do that?
Sure, you can certainly do a cash out refinance on your condo to obtain funds for your son's.....with a few conditions: Your condo complex will need to be Fannie Mae "warrantable", meaning it meets Fannie's guidelines for condos; you'll have to qualify based on your credit, income, and debt ratios, and you will be limited to, at most 80% of the value of your condo, potentially less depending on where you live, and the lender you do your loan with. | 03.28.15 @ 06:20
This should be relatively easy assuming sufficient equity in the current property (as well as credit, debt to income, etc as usual). Lenders have varying limits on the total loan to value they will allow on a property. Two things that limit this top LTV are condo (as compared to single family) and "cash out" which is what you're likely pursuing; while 80 is a common limit, a local lender who knows a market well may go to 90. The "cash out" penalty gets harsher as you pass 70% and may not make sense at 80%. So you could do a cash out refi or consider a non-cash out refi to lower your current payment and then add a 2nd after the fact to buy the new place. Play with both variations to see what makes sense for your goals and your lender's limitations.
Fannie/Freddie also have special consideration for a "kiddie condo" that could make it easier to purchase the place. Not clear if you'd fit within that designation. The question of your condo complex being "warrantable" that was raised above is a tad easier on a primary residence; the main concern is the financial health of the HOA. Many (local) lenders will have appetite for non-warrantable condos but at a slightly elevated rate. | 02.02.16 @ 23:33
Have you discussed with your son about paying taxes, regime fee, utilities, etc on the condo you wish to purchase for him or will you be covering these as well?
As the Mortgage Brokers have indicated this is possible if you & the condos meet the lending requirements and other variables.
Another option is to do a HELOC. When does your son need the condo? An an Investment Manager, we love to offer folks a margin of safety. Meaning that instead of using all the proceeds for purchasing a condo. Keep some in reserve at a higher rate of return. This additional ROI, gives you equity financing instead of debt financing, may offer you the ability to pay off the note earlier plus give you and your son greater financial leverage (more in your (owners equity pocket) which you can use to enjoy your lifestyle.
We invite you do contact us directly for further discussions. We work with lenders and other advisors that also share our mandate of always doing what is in your best interest. No obligation
It's not what you make, It's what you keep that determines your lifestyle. | 04.01.16 @ 22:40