As I do for all of my clients, I had already done cost sheets analyzing my estimated closing costs and explored the various options available to me to actually obtain the home of my dreams. I also explored the financing options with my trusted in-house mortgage professional, Teresa Sox with Prosperity Mortgage. Teresa provided me with ideas and options with various interest rates, even though she knew it would not result in an actual deal for her. This is because the builder’s incentives are always tied to the use of their own in-house mortgage lender. Teresa’s willingness to help me and my clients, regardless of whether she might profit is one of the reasons I love working where I work.
This step had me collecting information on all of my accounts and other assets and requesting a credit report. Because I had an investment property foreclosed back in 2010, I was very nervous about what it would say, but was thrilled that my credit, 8 years later, is completely repaired. FYI, if you’ve had a short sale or foreclosure over 7 years ago, it will no longer affect your credit. Having paid off all of my debts, including the loans on my car and my current home, I felt pretty good about what my debt/income ratio would be.
My first choice is to keep my current home as a rental property, with the anticipated rent covering most of the mortgage payment on my new home. Then once I retire, I will most likely sell my current home and pay off the mortgage on my new home in order to simplify my finances. My goal is to eventually be able to keep my expenses low enough that when I retire I can cover my basic living expenses with my retirement income. If there is a problem qualifying for the loan, I know I can always sell my current home, which I own free and clear, and pay cash for the new house. However, I know from experience with other clients, the timing on selling a home prior to purchasing another one is always challenging.