Getting a 3rd mortgage.

This cannot be answered without a few details.

- What is your income?
- What is your monthly cost for the NYC condo (not including rent), and how much equity do you have in it?
- What is your monthly cost for the Hoboken place?

OK, you are right, here are some numbers (i feel like I'm on Suzie Orman on "Can I buy it?":

annual income: $122000
NYC condo: mortage + taxes + condo fees MINUS rent = $180 per month
Equity in NYC condo: Owe $290K, recently appraised at $400K
Primary residence condo: mortgage + taxes + condo fees = $1400 month
Equity in Hoboken condo: Owe $93K, recently appraised at $350K

I have $200K in savings and another $200K in retirement no other debt. I want to know, if I wanted to make an offer on another condo (as I am moving to San Francisco from NJ), as my primary residence, say purchase price is 400K, do you think I could get another mortgage WITHOUT having to sell my primary residence first? Of course, I will list my primary residence at an aggressive price and to sell ASAP, I just don't know how long it would take. Thanks

sorry, I should add, for the NYC condo, the costs are $2480, the rent is $2300, so my net expenses are $180 per month

Count only 75% of rent

Monthly income 10k + NYC Rent * 0.75 (???)

Monthly cost for each of 3 property (NJ,NYC,SF*)
NJ: 1400
NYC: ??? (full cost not net)
SF:

Your appraise values probably wont mean much to your SF lender. It only makes a difference if you do a cashout refi. Which is possibly an option. You could possibly do a 70% LTV refi and get 150k cash out for your SF purchase.

I've been doing some research in getting a mortgage for one day I would like to buy a place of my own. The only problem with dc 10023 suggestion is something called mortgage tax or transfer tax. I'm not sure of the difference or they may be the same but if you get a mortgage in SF I believe you will save money rather than having to pay the transfer tax. I heard NY state is the only state in the country that has a transfer tax. What's that all about and why? Once again I would do research on that issue before doing a refi in NY and taking out a bigger mortgage for your NY properties. It may in fact be cheaper to get a first mortgage for your SF property. In California what happens if you can't pay the mortgage I believe they are a lot more lenient than in NY where they attach liens onto your first born if you default on your mortgage.

Point that I was making is you will have to qualify for essentially 3 properties at full cost (not net cost) vs Total Income (at 75% of rent)

Total Income = 11,892

At Typical Ratios
40% => 4757
36% => 4281

You can deduct your NJ and NYC (3880) monthly and get how much your SF monthly you will qualify for:
40% => 877
36% => 401

Pretty small numbers. This includes your SF mortgage + RE Tax + common charges...

200k Mortgage at 3.75% (don't think you can get this low) would still cost you 926/mo.

Solutions, you may be able to get a lender to use a higher ratio. You may be able to argue that NJ property is rentable and get them to give you credit on potential rent (but without a current tenant and no history of renting might be hard).

Having large amount of equity in your other mortgages gives you nothing. As SF lender doesn't get access to those properties if you default on SF property.

Yes, refi will have a cost. Shouldnt be paying a transfer tax again since you are owning it. Mortgage tax, not sure how that works for refi, but you may have to pay that again.

If you default on a California property then I believe the bank can not place a lien in your NY and NJ properties. However, if you default on your NY property then they can place a lien on your NJ and California properties. Is that correct?????

I think you are on the margins of qualifying until you sell your place in Hoboken.

Lending guidelines are going to look at your debt-to-income ratio. Standard guidelines are that 75% of your rental income can be included as income assuming you have 25-30% equity in the apt (which you either do or can get to with a $10K paybment). So your income will be considered at $122K / 12 + 0.75 * 2.3K, which is $11.9K a month. Your "debt cost" under the DTI guidelines are $3.9K ($1400 in Hoboken plus $2400 in NYC).

Assuming you take out a $300K loan at 4%, your monthly mortgage payment is $1432, plus let's say $668 in PITI, so $2.1K. That would take your "debt cost" to $6K, putting your DTI at 50%. This is about as high as guidelines allow with special considerations, which you may arguably have.

But the point is that the case is on the edge on paper, so talk to a lender before going too far.

Inonada,

Thank you, it should help me that I am going through a relocation with my employer and they will help with paying fees and closing costs, getting a good interest rate, etc. There is also a mortgage subsidy if I buy in CA and although they will not buy my primary residence, they will pay 6 months mortgage + taxes.

Are you sure you want to handle 3 mortgages? That's not only mortgages for each property, but 3 different tax payments. 3 different maintenance payments, 3 different utilities payments. Doing that every month sounds quite time consuming and stressful to me.

No, I will definately try to sell my condo in NJ as quickly as possible but given the market, it may take some time. My thinking is, if I see something I really like in CA, and I can get it for what I feel is a good price, then I would be inclined to make an offer and then have the responsibility of 3 mortgages (assuming I can get the 3rd mortgage) for whatever interm period it takes me to sell the NJ condo. I agree, it would be stressfull but I think the NJ condo, being in Hoboken, is in a better market than most of the rest of the state, and if I price it aggressively to sell quickly and be realistic, ie, willing to take a small loss if that is the case, then I think I can sell it within 6 months.

I'm admittedly very conservative financially. I think three mortgages for someone of your income is too much. Too much commitment and room for something to go wrong. My preference would be to rent in SF while I sought to sell NJ. Only after selling NJ would I consider buying in CA. Keep is simple. You do not have the kind of financial wherewithall imo to be juggling so much at once in terms of bank commitments.

Given that you have 12 months to make the purchase in order to get the carrot the employer is dangling in front of you, and that you have temp housing for 3 months plus the ability to sublet through a very healthy craigslist market, I'd make the sale of the NJ apt a requirement personally before getting an SF apt. Because you are cutting it so close, getting the loan is going to be a PITA, will likely cost you on interest rate, etc.

I'm curious about the purchase incentive your employer is giving you. What is its value as a fraction of your annual salary? Clearly, it sounds like they want to make it hard for you to leave. I'm just wondering what industry you're in, and what the size of the incentive is.

Your after-tax income is going to be $6K. Your NY/NJ apts are going to cost you $2K to carry. Your SF apt (rent or buy) is going to be $2K to carry. You'll have $2K for other living expenses, which'll be tight until you free up the $1400 obligation in NJ. Possibly, you'll be living in the red with a monthly loss if your spending is beyond $2K. If your tenant in NY moves out, it'll be another $2500 monthly in the red until you find a new tenant.

If you rent until you sell the NJ place, you'll have a healthy cash buffer to weather most anything both before and after the sell NJ / buy SF transaction. If you buy beforehand, your cash is going to go down to $50K. You'll probably be OK, but when your expenditures are $1K beyond your income, you'll be stressed. When your tenant moves out and you have no rental income for 2 months, you'll be stressed out. You'll probably be fine, but just stressed and perhaps making sub-optimal financial decisions in response to the pressures.

I'm in the pharmaceutical industry (research). The employeer is offering, among other things, a $60K mortgage subsidy to buy in San Fran. My understanding is that this money can be used to reduce the mortgage loan interest rate for a period of time. They will also pay ALL closing costs, realtor fees and other fees plus up to one mortgage loan origination point. It is a "carrot" but I need not much incentive, I love the idea of living on the West Coast (it has been a dream of mine for some time having lived all my life on the east coast) and this is a fantastic company but there are quite a few other companies like it in the area in the event I lost my job; there would be other opportunities in that area.

It is a really an amazing relocation package and I want to try to take full advantage. The only thing that I would have wanted is a buy-out option, ie, the company buys your home if you can't sell it but in this economy and at my level, buy-out clauses in relocation packages are very, very rare and I did not expect it.

Maybe the thing to do is hang tight, immediately and aggressively list my NJ condom for a quick sale, and if I get a good offer, then proceed with an offer in San Fran if I see something I like, and not necessarily wait for the sale of my home to close. I do have the temp. housing for 90 days and I want to take full advantage, its just that I am an impatient person by nature and I hate the idea of renting, and if I see something I fall in love with, i will want to make an offer...

sorry, I mean NJ condo, not NJ condom!

So with all the crazy stuff that's going on in the pharmaceutical industry like medicare cuts, new regulations and talks of universal health care you want to take out three mortgages. It's campaign time and one of the hottest topics is how this country is going to cut and regulate the living crap out of it's worst enemy, pharmaceutical companies. You shouldn't be taking out a mortgage rather you should be selling all your property and rent instead.

thanks for the advice, but I respectfully disagree that the pharmaceutical industry is the worst enemy of this country. I won't debate this since I've had enough of this discussion with friends and family, but without modern pharmaceutical drugs people would still be dying with AIDS, many types of cancer, diabetes, etc, etc.. You can be a fat lazy bum by eating terrible fast food and junk food and never exercise, resuling in sky-high cholesterol levels and yet, there are drugs you can take like Lipitor that will lower your cholesterol despite you abusing your body and not taking care of yourself. Guess what? You gotta pay for it, it ain't free.

Best advice: lead a healthy livestyle, eat well, exercise and maybe you won't need those "expensive" drugs that people love to complain about. That's all I'm going to say on the matter since we are way off topic.

"Maybe the thing to do is hang tight, immediately and aggressively list my NJ condom for a quick sale, and if I get a good offer, then proceed with an offer in San Fran if I see something I like, and not necessarily wait for the sale of my home to close."

I like that plan. At the end of the day, you have $750K in assets between your apts, cash, and retirement funds. You're stepping into a period where you'll probably be running at negative cash flow until you sell your place in Hoboken. If you buy in SF before you sell in Hoboken, your liquidity is going to drop to $50K but that should be enough to weather most problems given $700K in illiquid assets elsewhere that can be liquidated if the shit hits the fan. There's certainly a risk of a contract not resulting in a sale, but you should be able to handle the risk.

Okay, but if the government decides to lessen the time for drug patent protection or we with go through a major overhaul in our health care system don't cry to the bank holding your third mortgage that you have been downsized.

related question: several people mentioned to me that with the stricter lending guidlines, many banks will not even consider rental income from an investment property as part of your overall income UNLESS you have been a landlord for a certain period of time, like 2 years. Is this a hard and fast rule or can it vary from state to state and/or personal circumstances? Thanks