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Author: JBJarv Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Buying for future renting Date: 9/6/2013 1:22 AM
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I'm a military man and they have seen fit to send me to Ft Walton Beach, FL area for a new job. Next week the wife and I are going house hunting and I'm looking for advice on financing and home choice.

The home we currently have, we are planning to rent out via a property manager and it seems like we will bring in enough to cover mortgage and any repairs that pop up. Mortgage is 1150 and renting out for 1500-1550. As long as we can keep a renter in it, it should be helpful to us.

Since I have the VA loan available to me, I was assuming I'd just get another 30yr fixed VA loan for the new home in florida. Our plan is to also buy in florida, live in the house for about 4 years and then rent it out, just like the current home.

The VA loan can be zero down, but a funding fee can be reduced if you put 5% down. On a 200k home, our likely range, the funding fee goes from 2.3% to 1.5% if you put down 5%, so instant savings of about 2500, however that would just get rolled into the loan anyhow, and would be another 10k that we owe at closing, which means we'd either have to tap our HELOC to max or sell some stocks.

So looking for a range of advice, a bit stressed about taking on another big loan and want to make sure I get things right this time. If I hadn't have refinanced this year then I'd be taking a loss on the rent each month, lucky and trying to do better with this purchase cause I can;t bet on lucky.

Is VA loan the way to go with our renting out plan ans situation? 30 yr, 15 yr, ARM?
Would you recommend getting a house that we plan to rent later at all?
Should we put down the 5% to save on funding fee and have smaller mortgage?
Any tips on FL real estate in Pensacola/ Ft Walton Beach area?
Should we hire a mortgage broker to help us find the best loan for us?

Should I buy points to lower my rate? I can't afford too many without selling a bunch of stock. Points seem like a bit of a scam to me, I have a basic understanding of the math involved, but with the future value of my month taken into account I don't think the points for a lower rate is a great deal, but please let me know if I'm wrong.
What APR should a be expecting? my normal bank is quoteing a 4.5 - 4.8 APR, depending on points, but bankrate.com found one advertising 3.75 APR. Is that a scam?

The military will give me about 1650 a month for housing but we are looking at homes in the 150K-220K range, so our monthly payments should be well within the 1650 budget.

Assets
110k in TSP/IRA's
30k in stocks and mutual funds outside of retirement accounts
$3,500 in savings
Childhood/mothers home with Home equity line of credit up to 70k but we have 60K borrowed from the HELOC, so only 10k able to be borrowed at 2.3%
Current home Zillow'd at 240k but 192k left on mortgage 3.5%ish interest rate. Plan on renting at small profit
30k worth of Cars that were paid for by HELOC

Thank You for any and all advice, as a lurker this board has been very helpful and educational.

JBJarv
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