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Can we rent our house and buy in a different state?

We’re paying off all our credit cards and other debts, but also have a car loan and a house mortgage. Can we rent out our house and buy a new house in a different state?

There are two ways to approach this issue – the right way and the common way, which some might say is, by definition, the wrong way. You see, when you enter into a loan, there would be a stated purpose for the loan. Often an investment loan is a little more expensive than a loan for a homeowner who will live in the property. This was definitely the case 10 years ago, but in the recent past there was often no difference. I’d look at your loan contract and see what you can find.

If you hate legal documents, ring up your lender – you don’t have to reveal who you are and ask the question generally about what happens to your rate of interest if you turn your home into a rented property. In fact, if you say you want to borrow to buy in another state, they might fall over themselves to give you a great deal.

Remember, you will receive income for the home you rent out and there’ll be tax deductions as well for being a landlord. Also, many property investors will pay interest only loans, as they want better cash flow.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Saturday, March 19, 2011

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