Mortage Q -- Refiance first or New Home Loan

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I am not sure if this makes a difference, and I am considering all of my options.. Therefore ---

If I want to buy a new home, but not immediately sell the old home (I hope to refinance and maybe rent it out till it sells or ,market improves, does it matter if I apply for a new home loan first, or a refinanced loan first? Or would it even matter?

I really don't want to keep the "old" home, but not sure what to do due to the market.... Any suggestions??? Thanks!!

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Whats the mortgage interest rate on the 'old' home? If you want to sell it then why not try and sell it? If you fail to sell it then maybe rent it but I don't see why you wouldn't try to sell it first.

If you want to sell soon then refinancing may not make sense as you'd be spending closing costs and that would possibly cost more than any interest savings in short term.

If you want to buy a new house while owning the existing house the bank will require you to qualify for enough debt to carry both loans at once. You may/ may not be able to do so. Depends on the loans and your income and other debt.

If you refinance after you sell and rent it then you'd have to qualify for a income property loan which is higher interest rate and higher LTV requirements.

If you are going to rent, then refinance now
This has two benefits
1) you will have a lower payment, which will enable you to more easily qualify for your new mortgage
2) you will qualify for lower rates as you live there rather than the higher property owner/ rental rates

Won't the Refi ding his credit score for the 2nd home?

forbin4040 said:   Won't the Refi ding his credit score for the 2nd home?

Good Question!!

forclosedhome said:   forbin4040 said:   Won't the Refi ding his credit score for the 2nd home?

Good Question!!

Probably shouldnt' be a huge ding. I bought a house and qualified for a mortgage and then did a refi within a month afterwards and my credit scores didn't change by more than 10 or so points.

edit: Also.. if you do both applications within a short enough time period then it won't ding you. You're allowed to shop for rates and not have each application hit you.

Do the refi first. The "ding" will be at max 5 points and will not affect you at all. The plus is you will get a lower DTI ratio and it will look less like a buy and bail to the bank.

If you just get a no points no closing cost loan, it's a no brainer to do the refi. That's assuming the rate is still lower than your current rate. If you're sure you're going to sell the property in the next 5 years, just go for a 5 year arm with even lower rates. If you're hoping to make a profit, you probably want to sell in the next 3 years anyway because you won't have to pay capital gains taxes on a property you've lived in in the last 2 out of 5 years.

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