The wife and I currently have 12 years of payments left on our primary residence in Houston. I may be attending UTSA for the next four years and am interested in purchasing a home to live in during the semesters/weeks (just me). I will be in Houston most weekends and during the breaks between semesters. The wife and kids will stay in Houston in the primary residence. What are my loan options? Can I use a traditional mortgage? Given my upcoming college costs, I'm looking to put down as minimal as possible. Suggestions? I have a realtor in mind, but have not started the mortgage process. I have not accepted their admission offer yet, but still want to at least get the ball rolling to see my options.

[This message has been edited by Aggiemike96 (edited 3/18/2013 8:28p).]

FHA and VA are off the table but some banks are doing 5 and 10% down loans on vacation and second homes.
Now the question is how are you going to pay said mortgage while you are in school? That would be the first question I would ask after I asked why you were buying a house in San Antonio. Grants, stipends, The GI Bill, and student loans are not allowable sources of income to qualify.
Good Luck!!!


"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

[This message has been edited by Deats99 (edited 3/22/2013 8:24a).]

The wife makes a solid living. And, this is a PhD program, so there's a small income. That will be the source of funds.

Oh, and what are you referring to..."rent"?

You can do 10% down on the same terms as a primary residence. You'll need 6 months reserves for principal, interest, taxes and insurance on both mortgages at time of closing.

JJA...and if I don't have 10% down and/or 6 months cash savings on both mortgages at time of closing? No dice on decent financing?

Might be other options but as you know the credit world today is changed.

For a conventional loan on a second home, the min down payment is 10% as stated. That will not very from lender to lender. You other only option would be to get a "portfolio" loan meaning it is not a conventional loan and the bank will hold it on its own books. I would not think a portfolio lender would do a second home with less then 20% down.

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Is your current home an FHA mortgage? If not, FHA would also be a possibility. Which would satisfy your low down payment.

Unfortunately you can no have more than one FHA mortgage at a time though.

FHA would not consider this situation to be a primary home. FHA only allows purchase money on primary residence.

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Jay does have the correct answer here.

"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

What guidelines does they use to determine if this is my primary residence? Here are two scenarios:

#1 - My wife and I are divorcing/splitting and I'm taking a job in San Antonio and need to purchase a small house.

#2 - I need a place to live in SA for about 150 days a year while I attend grad school, but will maintain Houston as my "permanent address" for academic purposes.

I see a "vacation home" as used for 2-4 weeks a year. I will use this home for 30+ weeks (M-F) during semesters.

Forgive my ignorance, but how do I find out if my current Houston mortgage is FHA? I originally bought in 2001 (30 year conventional) and refinanced in July 2010 (15 year fixed...but not sure if FHA or otherwise).

Correct, Jay, but I closed a file couple a months ago, the wife and family lived in San Antonio (with conventional mortgage), but the husband lived and worked during the week in Midland. Had no problem going FHA, because that was truly his primary residence.

Would agree, that he would need to change his permanent residence address.

[This message has been edited by almcknight20 (edited 3/19/2013 3:38p).]

Could I pay cash and then turn around with a "home equity" loan? I haven't a clue why this has to be so complicated. I'm set on avoiding dumping four years of rent down the tubes at an apartment!

Yes you could and if looked at as a investor property you can take out probably up to about 75% of the value of the home.

Since it is a investor property, Texas A6 Home Equity Laws would not apply either. Making it a much easier loan for you and the lender.

If you can pay cash then why not just put 25% down?

"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

We offer portfolio loans for Secondary Houses at very good rates.

Let me know if interested.

Thanks

Why would I cash in investments earning decent return when I can borrow on a mortgage at a tax-deductible 3.5-4%? This is nearly free money.

Southlake...talk to me....username @ yahoo.

Some food for thought.
I understand your logic, but between PMI(it will be there in some capacity whether TAMI or MIP) and higher rates for the low down payment you are way more than average returns on investments. So let's look at it this way. The least down you will find is 5%. So you are saving 15% of the purchase price. pretend you are making an 8%(crazy optimistic) return and your purchase price is $100K. So you are making $1200 a year extra on your reduced down payment($15,000). OK so on your 95K principal your are now paying PMI(.5-1%) depending on program and at least a .5-1% higher rate for high LTV on said $95,000. So at best it is costing you and extra $950 a year, at worst it is costing you $1900 a year. So only in the very best case scenario when you are earning a consistent year over year 8% investment return is it better to put less than 20% down. Now the absolute way to debunk this is to earn a absolute average rate of return of 12.67% on your down payment savings. If you can guarantee that I would like to invest with you.
Now from a monthly cash flow standard:
-with a 5% down payment you are looking at a $501.04 PI + mortgage interest
-with 20% down payment you are looking at a $364 PI payment
So cash flow wise your 20% is leaving $146.04 a month or $7009.92 over the 4 year expected life of your property in your pocket.
All kinds of people will say all kinds of things, but those that have, put 20 or 25% down for rate and payment benefit. Just some thoughts from a mortgage banker that is not out to sell you anything.


"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

Now the way I would go at it would be a HELOC on your primary. Then you would have cash buyer leverage, a likely tax advantage on the interest, and a sick rate in the 2's. Most banks are interst only during the 10 year draw period so you would be money on that payment. Say around $250 a month with the current $100,000 model.

"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

HELOC = Home Equity Line Of Credit? In the 2%? Ok, now we're talking.

Not trying to hijack this, but it slightly resembles my current situation.

Wife and I are moving back to Texas in Sept (she is finishing up residency in Blacksburg, VA) and we already have a home in Houston. It is currently being rented out and we will most likely not be moving back to Houston.

But because I have that house, do I need a min 10%+ down-payment on any other house we would be looking to move into?

Matteus,



No, that would be different. The new house would be your "primary" residence. So, you could put the 5% down for a conventional loan or 3.5% for a FHA loan (if your current home is not an fha loan) You would have to qualify with both mortgages from both a debt to income ratio and a "reserve" point of view. The reserves are simply money left over after down payment/closing costs etc. The fact that you own an investment property will require this reserve requirement to be a bit higher then if you were just buying your one and only property.

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Bump.

AggieMike...what did you end up doing on this? We're sort of in a similar situation and trying to figure out best way to do it.

Similar boat here.

Moving to Texas in a few weeks from out of state. Have a house (for sale) here in NC.

Wife and I are looking at buying a (cheap) house here in Tx for the next 2-3 years. Would it be fairly easy to get pre-qualified for a second house/mortgage? What kind of numbers will the bank look at for mortgage debt vs income? 25%? 28%? more?

Total debt ratio needs to be 48% or below and you'll need 6 months cash reserves to cover principal, interest, taxes and insurance for both homes if the trailing house isn't sold before you close.

Second primary residence

Military intelligence

Jumbo shrimp

We closed on 6/17! We ended up getting a vacation/second home mortgage that only required 10% down (as opposed to typical 5%). We asked for additional closing costs from seller, so this helped defray some of the additional downpayment.

We used aimloan.com and got 4 1/8 for 30 years fixed (the rate depends on rebates/points you select). Our experience is mixed with Aimloan, so we can't recommend them nor say stay away.

Congrats!

"When the government fears the people, you have liberty; when the people fear the government, you have tyranny." Thomas Jefferson
"The only thing necessary for the triumph of evil is for good men to do nothing."
Edmund Burke