Hello all. I am new to this forum and would like to thank everyone for sharing their knowledge. I am not a real estate investor (yet) but would like to do so in the near future. I have a lot more I need to learn before I test the waters of real estate. I am currently in a situation where I would appreciate your advice as to what the best option for me would be.
About a year and a half ago, I purchased my first home (brand new) in a new community. The builders were asking $183K and I offered $163K. They accepted my offer and I financed it with a VA home loan at 4.8% and rolled in all my closing costs and fees which means I moved in with $0 out of pocket. The total amount financed was $173K.
Due to an expanding family and lack of space, my wife and I would like to purchase a bigger home. My dilemma is that I am unsure what the best option for me would be. I think it would be hard to sell because it is difficult for me to compete with the discounts the builders are currently offering. On the other hand, I am fortunate enough to have a one of a kind floorplan in my community (no other floorplan like mine exists). I would like to lease this house out, but I would have to refinance it (since it was purchased with a VA) and I would end up with a higher interest rate and more closing costs. This property is located in McKinney, TX (Craig Ranch) and I believe it would be worth it to keep it since it is located across the street from a TPC PGA golf course. Leasing it out would also get me started in the real estate business.
I am unsure what to do here and I do not want to take a beating by selling this house. Any advice you can give me would be greatly appreciated.
I don’t want to lease with a VA loan because I get a discount on my interest rate. Since I would be buying a biggr (more expensive) house, I would want the discounted interest rate to apply to that mortgage.
Oft times, the rate from the VA is not all that spectacular, it is more a factor of the low downpayment program option. While 4.7% is a good rate, with good credit, you may be able to find one with nearly similar terms.
If you rent this out and buy another house, you cannot get another VA loan until this one is satisfied and you get your VA rights re-instated and a new certificate.
How do you propose to get the lower rate for the new home? Realistically, to use the lower VA rate on the new home, you would have to refi the first home with conventional finanacing and then take a VA loan against the new home (unless your wife also has VA benefits!).
Right, If you refi the rental house so you can use your va for the next, you will incur unnedded loan costs, and you will be trading a lower mortgage on your rental for a lower mortgage on your primary, then you will have a higher payment on the rental, pluss the laon costs. JUst do the math and see which is a better scenario, J
I am in a similar position with my home. Whether this was a good idea or not (this is yet to be seen), this is what I did…
I refinanced conventional so I could free up my VA cert. My interest rate is within .25% of my VA rate. The new conventional loan gives me the option to pay an interest only payment or a 30yr amortized payment every month. This gives me the choice of how much cash flow I want to have from month to month. I plan to lease option the home on a 3 yr contract. I also plan to finance 100% on my next home with my VA cert. Here is a hint that helped me. When I refinanced, I explained to the mortgage broker what I wanted to do. He waived his origination fee (He just took the kickback from the bank) because he knew I would be buying again within a year, and he wanted my business. I am now in a position to buy MY new home, while making the money to (hopefully) fund some future investment opportunities.
I hope this helps you to weigh your options, and good luck to you.