My wife and I are in the process of purchasing a new home in Arizona. We currently own another home that is underwater $50 - 70K. We are deciding on what to do with the current home. We have listed on the loan app that we plan to rent the old home after we move into the new home. We have two loans with the current home, the first is purchase money no refi with $138,000 due, the second was originally purchase money for $19,000 then one month later refied to $38,000 with $19,000 cash out. We owe $31K on the second. I was thinking we would refinance the first with a Harp 2 lowering my monthly payments so that I can at least break even on the mortgage with the rental income. I have been discussing this with the broker who is obtaining my loan for the new home. The refi would likely be with the same bank as the loan with the new home.
My concerns now are:
1. Would the refi turn the new loan into a recourse loan thereby making me responsible for the deficiency if we were to default?
2. If we refi with the same broker who set up the new loan using the same bank and we were to default on the harp loan, can that cause any problems with my new loan being with the same bank?
3. If we decide not to do the Harp refi now after already having the broker start the process, could that arouse suspicions with him that we might be thinking "buy and bail" and then alert the lender?
Trying to figure this all out before closing on new house. I know if we do walk away I could be on the hook for at least $19,000 if not all of that second loan; We're prepared to deal with that by hopefully forcing a settlement. If we walk a few months after a refi if things don't work out renting, I would hate to be liable for the other 30+ K we would likely owe on the harp 2 refi.
Any info and advice would be greatly appreciated!