There are times when people need a mortgage loan when they already have one. For example, suppose you are trying to buy a house before you sell your current one. If you buy another house before selling yours, you might end up with two mortgages – one on each home. Getting a mortgage to buy another house is not always easy. In fact, you might face some challenges if you attempt this, and here are some to expect.
Lenders Consider Income and Debts When Approving Loans
The first thing to consider is the eligibility requirements for getting a home loan, such as income. Your income matters to lenders, as it is the money you earn to repay loans. The problem with getting a second mortgage to buy another home is that you might not have enough verifiable income to pay for both loans. Even if you have money saved in the bank that you plan to use to carry you through until you sell your home, banks do not care. You must have enough income to cover all your expenses, including both mortgage payments. If you do not have enough, a bank might not issue you the second loan until you sell your first house.
Additionally, a bank will look closely at your debts. If you have a lot of debts when applying for a second loan, you probably will not have enough income to cover both payments. Therefore, it is usually easier to apply for a mortgage loan to buy a house after you sell your existing home.
Affording Two Loans Is Not Easy
The other thing to think about is affording both loans. If a bank approved a mortgage for you to buy another house, could you afford both? What would happen if you could not sell your existing home for a year or two? Most people would experience trouble trying to make two mortgage payments for a few months, let alone a few years. Therefore, it is often better to sell a house before applying for another home buying loan.
If you are thinking of getting another mortgage while you still have yours, talk to a broker to find out if you qualify for another loan. If not, you might need to sell your house before you begin thinking about getting another loan. After that, you will have fewer challenges to face when applying for a home buying loan. To learn more, contact a broker near you.
Share27 January 2021
When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.