Username Post: renting out your home
Henri Jean
Posts: 40173
Joined: 04-25-09
Henri Jean

    In response to PokeyMom

For the house we are going to rent out - we are taking care of the yard. We are tacking the price of lawn service onto the rent to make sure it is done and the yard isn't destroyed. More and more landlords seem to be doing that instead of just hoping the renters take care of it.

If you are doing a VA refi there are limits. PokeyMom above seems very knowledgeable - I used to know what they are but I don't know anymore. Her recommendation and advice was very good. I've been playing and traveling for the past 5 years - not bothering with selling real estate so I'm a bit out of the loop.

But what that means is that you are allowed to have a certain amount you have financed with the VA. In other words, if you finance the first house and use most of what is allowed you won't have much you can borrow on another house until the first is paid off.

However, I don't know what percentage of your new home you will need to get a loan for but it can't exceed the limits of the loan amount you can have with the VA. Anything above that, you have to pay cash.

So make sure you can put this house on a VA loan and the new one on a VA loan.

The big advantage of a VA is that you don't have a down payment. Since you have equity, you can use that as your downpayment. FHA and VA loans are often the same.

If you have to borrow enough on your new house to max out your VA benefits, you may want to check into FHA for this one. Or even better, a conventional loan. Then if you don't have the 20% equity already and have to pay PMI, then you can get rid of it when you do get 20% equity.

Also keep in mind that every time you get a VA loan the funding fee goes up. And since it is based on a percentage of the amount of the loan, that would be another reason to look at a comparison between FHA, VA and conventional.

We bought our current house on a VA loan which he paid off in less than a year. We bought our next house conventional becuase of the escalation of the funding fee. I doubt we will ever use our VA again for buying a house.

VA is a tremendous help if you have no downpayment or are refinancing and have no equity, but we've gotten to the point where it isn't worth it to us because of the funding fee. Conventional makes more sense to us since we put enough down to not have PMI or MIP.

USAA is excellent - we use them too - they have our car insurance! But make sure you will have enough VA monies left for your new house if you are going to finance it through VA. If not, I would look at another means, FHA or even better, conventional, for your current house so you can use the VA for the more expensive house.

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