Lenders take a stand agains home owners walking away
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6 months ago, if a homeowner could show an executed lease on their home, they could purchase another home, washing most of the mortgage of the rental with the income from the lease.
Right or Wrong? All in opinions I guess.
Lenders are now taking steps to stop this from happening. This is an alert that I received today from a local lender. Thanks Ryan at Smart Financial....
FHA made a major change to their underwriting guidelines this week with regards to a borrower that rents out his current primary residence and then buys a new primary residence. In the past, a borrower was allowed to provide a rental contract on the primary residence that he was vacating which could wash out the mortgage payment when calculating qualifying debt to income ratios. The new guidelines say that a borrower is only allowed to do this if they have 25% or more equity in the primary residence they are vacating. If they do not have 25% equity they need to qualify with both mortgage payments. Fannie Mae and Freddie Mac have already implemented a similar rule requiring 30% equity.
