[gypsychic]

Hoping for some advice/opinions on a plan we are considering. Hubby and I don't have to sell and move, we are doing OK where we are, but for many personal reasons, after 10 years in Dade City are now considering a move, most likely to Lakeland. We do have a modest home in NC for vacation and possible retirement, so we are paying a modest mortgage up there as well.

Our home in Dade City is modest, just a vintage country cottage on an acre, but we have sunk a lot of money into it and have some good equity even given the current market. I am wondering if in this market climate would it be better to take out a HELOC, in which to have money to fund a good down payment for the next (modest) home or try to get a buyer outright and not deal with the HELOC? If we borrow, we would have to get our home sold or lease-optioned pretty quickly, as we would not be able to afford to pay all of these mortgages; nor would we quality for the mortage on the future home. The advantage I see to the HELOC is giving us more time to find the right house and also to move at our leisure. The downside is the risk involved with borrowing, and the pressure to find a qualified buyer.

Our property is unique in that there is almost nothing else like it to choose from, it is residential-agricultural zoning but close in; it would appeal to a certain niche of buyers, such as artists or crafters, people who want to keep a pony or chickens and who like to have a huge garden, etc. It is also located in a good area of town with easy commute to Tampa. So we would not be competing with all the developments with large homes, which are mostly high-priced up here (our property will be priced under $200,000) not sure of exact price.

Whatever we do, we are not able to do anything until at least the fall, or possibly early next year. Wondering what interest rates will do, and also will the real estate drop or hold steady? Lakeland never was an overpriced market to begin with, and sales are still being made here in Dade City, although homes sit on the market longer.

So, what do any of you think here? Is it too risky, good idea or bad or any other suggestions? I love this board, I really learn a lot from it!

[macguy]

Originally Posted by gypsychic

Hoping for some advice/opinions on a plan we are considering. Hubby and I don't have to sell and move, we are doing OK where we are, but for many personal reasons, after 10 years in Dade City are now considering a move, most likely to Lakeland. We do have a modest home in NC for vacation and possible retirement, so we are paying a modest mortgage up there as well.

Our home in Dade City is modest, just a vintage country cottage on an acre, but we have sunk a lot of money into it and have some good equity even given the current market. I am wondering if in this market climate would it be better to take out a HELOC, in which to have money to fund a good down payment for the next (modest) home or try to get a buyer outright and not deal with the HELOC? If we borrow, we would have to get our home sold or lease-optioned pretty quickly, as we would not be able to afford to pay all of these mortgages; nor would we quality for the mortage on the future home. The advantage I see to the HELOC is giving us more time to find the right house and also to move at our leisure. The downside is the risk involved with borrowing, and the pressure to find a qualified buyer.

Our property is unique in that there is almost nothing else like it to choose from, it is residential-agricultural zoning but close in; it would appeal to a certain niche of buyers, such as artists or crafters, people who want to keep a pony or chickens and who like to have a huge garden, etc. It is also located in a good area of town with easy commute to Tampa. So we would not be competing with all the developments with large homes, which are mostly high-priced up here (our property will be priced under $200,000) not sure of exact price.

Whatever we do, we are not able to do anything until at least the fall, or possibly early next year. Wondering what interest rates will do, and also will the real estate drop or hold steady? Lakeland never was an overpriced market to begin with, and sales are still being made here in Dade City, although homes sit on the market longer.

So, what do any of you think here? Is it too risky, good idea or bad or any other suggestions? I love this board, I really learn a lot from it!

Do you really want to put yourself under that pressure? It sounds like things would have to all fall into place just right or you could get in trouble. It would scare me a little. Either way you need to talk one on one with a expert with no personal interest other then to be honest with you and not some guy from the bank trying to get you qualified.

[jbravo]

Originally Posted by gypsychic

Hoping for some advice/opinions on a plan we are considering... we are now considering a move, most likely to Lakeland. We do have a modest home in NC for vacation and possible retirement, so we are paying a modest mortgage up there as well.

... I am wondering if in this market climate would it be better to take out a HELOC...


So, what do any of you think here? Is it too risky, good idea or bad or any other suggestions? I love this board, I really learn a lot from it!

A Heloc is a variable interest rate mortgage. I know Lakeland and prices there are at a standstill with a slight downturn; however, there are almost no sales happening; therefore, it's not like you are about to be priced out of the market.
Do you really want 3 mortgages?!
Think about it. You sound like a nice person and in this market you could get hurt; it doesn't seem you have the wherewithall to survive a strong downturn in the general economy or an increase in interest rates.
I remember rates at 14% and 15% A HELOC is fine for a short period, anything other than that is very risky.

Luck

[harry chickpea]

In your situation, if you will only be able to fund a downpayment with a HELOC, you will be hard-pressed to find a bank willing to write a mortgage, unless you have a great credit score. Waiting until fall will probably significantly reduce the value of your existing property and eat away at your equity. I would act now rather than later.

Six months or a year ago, in a hot market, I would have suggested the HELOC route as being fine, since you might lock in a lower price on your new home. You are now going into hurricane season AND a riskier market, and you could be sitting with the Dade City house unsold for a while. You could lose homestead exemption on the Dade house if you moved to Lakeland, or the Lakeland house if you stayed in Dade City. Insurance on an unoccupied house might be an issue, although it probably won't. If you buy a house in Lakeland and a hurricane hits that one or the Dade City house before you can sell it, you are in a world of pain.

In your shoes at this time, I would hire a competant, no punches pulled, independent appraiser BEFORE listing or setting a price on your house. It'll cost about $250, and you'll realize at some point that it is a great investment. Once I had that appraised value figure in my hands, I would immediately find the most aggressive realtor in the area, and list the property at $5,000 less than the appraised price, to maximize the showings and offers, and minimize the effects of a downturning market. The realtor would have to pre-qualify anyone wanting to do a walk-through, to eliminate the lookie-loos and false hopes that plague the "buy-owner" sellers. I would also have a color brochure or bullet sheet with photos showing the unique aspects of the property, that I would only hand out to people who finish a walk-through. With proper marketing, there should be offers within a 30 to 60 day period. Before committing to any particular offer, I'd verify the credit score and planned financing of the buyer. Someone offering $170K with good credit and a downpayment will have a better opportunity to complete a deal than someone offering $175K but needing to sell another home or needing 100% financing.

Once I had the house sold and money in hand, I'd rent in Lakeland through the summer and fall to scope out the neighborhoods and properties on the market, and wait out the hurricane season. Once November hit, I'd pounce on the property I liked best.

Working this way, you would pay no interest on the Heloc, maximize the homestead exemption benefits, have no sleepless nights wondering when an offer on your house would occur, and be as much in control as possible.

[gypsychic]

Originally Posted by harry chickpea

In your situation, if you will only be able to fund a downpayment with a HELOC, you will be hard-pressed to find a bank willing to write a mortgage, unless you have a great credit score. Waiting until fall will probably significantly reduce the value of your existing property and eat away at your equity. I would act now rather than later.

Six months or a year ago, in a hot market, I would have suggested the HELOC route as being fine, since you might lock in a lower price on your new home. You are now going into hurricane season AND a riskier market, and you could be sitting with the Dade City house unsold for a while. You could lose homestead exemption on the Dade house if you moved to Lakeland, or the Lakeland house if you stayed in Dade City. Insurance on an unoccupied house might be an issue, although it probably won't. If you buy a house in Lakeland and a hurricane hits that one or the Dade City house before you can sell it, you are in a world of pain.

In your shoes at this time, I would hire a competant, no punches pulled, independent appraiser BEFORE listing or setting a price on your house. It'll cost about $250, and you'll realize at some point that it is a great investment. Once I had that appraised value figure in my hands, I would immediately find the most aggressive realtor in the area, and list the property at $5,000 less than the appraised price, to maximize the showings and offers, and minimize the effects of a downturning market. The realtor would have to pre-qualify anyone wanting to do a walk-through, to eliminate the lookie-loos and false hopes that plague the "buy-owner" sellers. I would also have a color brochure or bullet sheet with photos showing the unique aspects of the property, that I would only hand out to people who finish a walk-through. With proper marketing, there should be offers within a 30 to 60 day period. Before committing to any particular offer, I'd verify the credit score and planned financing of the buyer. Someone offering $170K with good credit and a downpayment will have a better opportunity to complete a deal than someone offering $175K but needing to sell another home or needing 100% financing.

Once I had the house sold and money in hand, I'd rent in Lakeland through the summer and fall to scope out the neighborhoods and properties on the market, and wait out the hurricane season. Once November hit, I'd pounce on the property I liked best.

Working this way, you would pay no interest on the Heloc, maximize the homestead exemption benefits, have no sleepless nights wondering when an offer on your house would occur, and be as much in control as possible.

Thanks, Harry Chickpea, those are good thoughts - thanks to everyone else too. The only thing is, I can't act until fall because I will be spending most of the summer up in the NC property, I have to attend to that one and keep up maintenance. Also, I have a little more to do on the Dade City house before I would put it on the market. So, whatever I do, it will have to wait until fall. I guess I was concerned, as you mentioned Harry C., that prices (and my equity) would drop further if I wait too long. But then, if so, I would hope that anything I want to buy would drop as well.

The HELOC would not cost me anything to get, and could sit at zero, and I was considering selling my Dade City house on a lease option and getting someone in here quickly to cover most of the payment we would have to pay on the mortgages. I would either have a lawyer or my excellent R.E. agent handle this, checking credit and so forth.

Well, I guess I have all summer to debate this! I welcome any further input on the matter!