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Old 03-30-2015, 01:45 PM
 
3,483 posts, read 4,615,962 times
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Hi,
assume you have a 550k paid off home, and you're looking to upgrade to a house that's 850k. Is it better to get a 400k or 450k Heloc and THEN get the remaining balance mortgage? or is it better to just get a loan for the whole amount?

the plan would be to sell the 550k home asap to pay off whichever option is selected.

thoughts?
Pros and cons of each?
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Old 03-31-2015, 10:07 AM
 
Location: Southern California
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No on the heloc for that much, are you planning on using it as the downpayment on the next property to get a conventional ?

Last edited by thelopez2; 03-31-2015 at 10:23 AM..
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Old 03-31-2015, 10:27 AM
 
Location: Boise, ID
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Personally, I'd just get a new mortgage.

But... just thinking out loud, what would your interest rate be on the Jumbo loan, vs a regular loan and HELOC? Keeping in mind that the HELOC would be paid off when you sell, whereas the Jumbo loan would stay that rate for the life of the loan (until you sell, pay it off or refi). If the premium on the Jumbo was high enough, I might consider the short term HELOC.

Have you talked to a lender yet to find out if they will even allow you to do the HELOC+loan deal? Lending rules are tight right now, and I have no idea if that fits in their little boxes or not.
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Old 04-01-2015, 10:59 AM
 
Location: New York
2,251 posts, read 4,160,232 times
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Quote:
Originally Posted by Thinking-man View Post
Hi,
assume you have a 550k paid off home, and you're looking to upgrade to a house that's 850k. Is it better to get a 400k or 450k Heloc and THEN get the remaining balance mortgage? or is it better to just get a loan for the whole amount?

the plan would be to sell the 550k home asap to pay off whichever option is selected.

thoughts?
Pros and cons of each?
Heloc equals a credit card against your home, only making minimum payment no end date. This can be a better option taking out what you need, then paying it back. Refinancing into a 30 year @ 80% LTV = $440k. Fixed payment with a known end date. Higher LTV can result is PMI. In both cases mortgage interest is still a tax write off. It boils down to your cash flow.

Another factor is valve.
  • Your home insurance would be going up due to the higher replacement value.
  • Expansion - larger living area can result in higher property taxes.
  • What is value of similar homes around your home. If your neighborhood value is around $550k, there can be an issue with trying the recoup what you put into your home when selling....
My $00.02

..

Last edited by Modification Specialist; 04-01-2015 at 11:14 AM..
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