Settle first property before acquiring a second
Jessica White/DC Columnist
Issue date: 4/29/07 Section: Business
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The ironic thing is that you are probably lucky because it is highly unlikely your tenant will qualify to buy this property this year, so you will not be forced to come up with the $50,000 needed to sell it. You will therefore continue to collect $700 more in rent each month for this property than it is actually worth. Hopefully, the market will improve before your tenant moves out and you can sell the property close to your purchase price.
A word of caution: considering what your debt-to-income ratios must be, you probably used stated income loans to buy one or both of your properties. Unless you are certain that you have thirty-year fixed loans, I suggest that you read your loan documentation carefully to see if you have adjustable rate mortgages and if so, when those payments will adjust. I do not want to scare you further, but your situation is bad and may get worse. Since I have no great advice on how you can get out of this jam now, my only hope is to make sure you are knowledgeable about your debt so you do not suddenly find yourself in an even worse situation one day.
I strongly suggest that you look at your loan papers and get the help of a financial planner now, so that you can deal with this serious issue.
Best of luck - and do not buy any more property until you have this problem completely resolved! (Not the words you usually hear from a mortgage lender.) Sincerely,
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage lender for a national bank in Fort Washington, MD. Call her with your questions 202-607-4449 or email her at Jessica@msmortgagemaven.com and you may get your question answered in this column. You can also apply online at www.msmortgagemaven.com.
A word of caution: considering what your debt-to-income ratios must be, you probably used stated income loans to buy one or both of your properties. Unless you are certain that you have thirty-year fixed loans, I suggest that you read your loan documentation carefully to see if you have adjustable rate mortgages and if so, when those payments will adjust. I do not want to scare you further, but your situation is bad and may get worse. Since I have no great advice on how you can get out of this jam now, my only hope is to make sure you are knowledgeable about your debt so you do not suddenly find yourself in an even worse situation one day.
I strongly suggest that you look at your loan papers and get the help of a financial planner now, so that you can deal with this serious issue.
Best of luck - and do not buy any more property until you have this problem completely resolved! (Not the words you usually hear from a mortgage lender.) Sincerely,
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage lender for a national bank in Fort Washington, MD. Call her with your questions 202-607-4449 or email her at Jessica@msmortgagemaven.com and you may get your question answered in this column. You can also apply online at www.msmortgagemaven.com.
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