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I own my single family home free and clear, and I have less than $3000 in debt otherwise. My FICO is around 720. I've been thinking about buying another house while the prices are low (well, relatively anyway!).
The issue is getting my hands on a decent down payment. Is it a bad idea to take out an equity loan on my first home in order to come up with a good down payment on a second home? I would plan on moving into the second home and keeping the original one as a rental.
As long as you can handle the payments on both hands in case your tenants doesn't pay you, I think it is one way to start to build a real estate portfolio. And assuming you have lived in your current home for 5 consecutive years of the last 8 eight, you may be elible for the $6500 move up/down credit.
I own my single family home free and clear, and I have less than $3000 in debt otherwise. My FICO is around 720. I've been thinking about buying another house while the prices are low (well, relatively anyway!).
The issue is getting my hands on a decent down payment. Is it a bad idea to take out an equity loan on my first home in order to come up with a good down payment on a second home? I would plan on moving into the second home and keeping the original one as a rental.
Thoughts and advice please? Thanks in advance.
Why do you want to buy another house? Are you planning to rent it out, as an investment?
Can you not come up with at least 5-10% to be used for down & closing costs ? I would try to save the money 1st instead of borrowing against your 1st house.
The income from house 1 can help pay the mortgage on house #2. I currently have 3 rentals that I've done this way and I use each new paid for rental to help pay for the next.
As long as you can handle the payments on both hands in case your tenants doesn't pay you, I think it is one way to start to build a real estate portfolio. And assuming you have lived in your current home for 5 consecutive years of the last 8 eight, you may be elible for the $6500 move up/down credit.
shelly
Sorry, that credit is only available if the first residence is SOLD. Keeping it as an investment disqualifies the transaction from eligibility.
I own my single family home free and clear, and I have less than $3000 in debt otherwise. My FICO is around 720. I've been thinking about buying another house while the prices are low (well, relatively anyway!).
The issue is getting my hands on a decent down payment. Is it a bad idea to take out an equity loan on my first home in order to come up with a good down payment on a second home? I would plan on moving into the second home and keeping the original one as a rental.
Thoughts and advice please? Thanks in advance.
I would pull enough equity out of your current home to put at least 20% down on the new one. Not a bad idea at all.
I think that is a very good idea as well. Granted, you will have 2 mortgage payments but the 2 together will proably be pretty close to the same amount you would pay with one large loan.
Sorry, that credit is only available if the first residence is SOLD. Keeping it as an investment disqualifies the transaction from eligibility.
What is your reference for this information. I have not been able to find that information on the IRS website, and it doesn't appear to be a requirement from what I've read?
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