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Message
Home equity loan or HELOC from first home to use as downpayment for second home?
Posted on 11/10/15 at 9:17 pm
Posted on 11/10/15 at 9:17 pm
We have a good chunk of equity built into our first home. But with a growing family, my wife and I are thinking about moving into a bigger home and would like to use the equity from our first home to help with the purchase of the second home.
Questions:
1. Can we take a home equity loan or HELOC against the first home and use that for the downpayment for the second home? Also, which one is the better option in this case - Home Equity Loan or HELOC?
2. Will be able to take a loan against the full amount of equity built up or are there restrictions to the size of the loan?
Questions:
1. Can we take a home equity loan or HELOC against the first home and use that for the downpayment for the second home? Also, which one is the better option in this case - Home Equity Loan or HELOC?
2. Will be able to take a loan against the full amount of equity built up or are there restrictions to the size of the loan?
5
Posted on 11/10/15 at 9:20 pm to Street Hawk
What about selling your home to get that equity? Once you tap into that equity it will show up as debt to income and you won't probably be able to borrow as much towards your future home.
Posted on 11/10/15 at 9:28 pm to BullredsRus
quote:
What about selling your home to get that equity?
Sounds like the OP wants to hang on to the property as an investment. If the rate is low enough that makes sense.
@OP - I highly recommend you take a day off and just walk into a handful of area bank branches and talk with their lending officers. Of course they will sell you as much as they can on their own products but you'll get a good idea of what your constraints might be. Plus they will be serious offers, not just random board advice.
It's completely free to do so, just walk in and ask questions.
Posted on 11/10/15 at 9:29 pm to Street Hawk
I did this with HELOC and was able to get 90% with iberiabank. My advice is to just sell your house and use that equity unless you are prepared to pay 2 notes for a while. It can be quite stressful even if you have the money to handle that.
Posted on 11/10/15 at 9:30 pm to Street Hawk
quote:Maybe I'm a bit slow, but have you considered just letting everyone live in the same house? You could close on the same date and just roll the equity from your current home into the next one. Or are you aspiring to own two separate residences for the long term?
But with a growing family, my wife and I are thinking about moving into a bigger home and would like to use the equity from our first home to help with the purchase of the second home.
Posted on 11/10/15 at 9:42 pm to BullredsRus
quote:
What about selling your home to get that equity? Once you tap into that equity it will show up as debt to income and you won't probably be able to borrow as much towards your future home.
We don't really want to sell our first home. We are in a very good rental market (in CA) and expect the rent to easily cover our monthly mortgage payment and HOA fees. We would like to keep this house long term, rent it out and continue to build equity in it, while we live in a larger home.
This post was edited on 11/10/15 at 9:44 pm
Posted on 11/11/15 at 7:20 am to Street Hawk
My wife and I will be in this same situation in a couple years. I did not want to lose the house because it was in a great area and would have someone else paying the mortgage and in 20 years we would have it paid off. I think I am now leaning towards selling it and not having to deal with the stress. Either way, please update us on what you decide to do and how it works out.
Posted on 11/11/15 at 6:51 pm to Street Hawk
quote:
expect the rent to easily cover our monthly mortgage payment and HOA fees.
Will it also cover your home equity loan? Are you looking at having two mortgages and a home equity loan payment each month?
Posted on 11/11/15 at 8:30 pm to Street Hawk
If income is not a concern for approval then heloc or a 2nd mortgage is possible.
You probably won't be able to get as much equity on a HELOC and you'll have to worry about increasing interest rates. I have a HELOC that allows you to lock-in the balance. If rates start rising fast, I can limit the damage.
That's not a standard feature but it's worth asking about when you start shopping banks.
My .02
You probably won't be able to get as much equity on a HELOC and you'll have to worry about increasing interest rates. I have a HELOC that allows you to lock-in the balance. If rates start rising fast, I can limit the damage.
That's not a standard feature but it's worth asking about when you start shopping banks.
My .02
Posted on 11/12/15 at 10:40 am to Street Hawk
1. yes you can take a HELOC out for the down payment as long as you qualify with both house notes and the HELOC note.
2. HELOC and equity line of credit are the same thing. Most banks go to a LTV of 90% on HELOCS with no closing cost unless you pay it off within 12 months
2. HELOC and equity line of credit are the same thing. Most banks go to a LTV of 90% on HELOCS with no closing cost unless you pay it off within 12 months
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