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Old 10-12-2019, 06:50 AM
 
766 posts, read 1,241,633 times
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Quote:
Originally Posted by rummage View Post
Let's say your home has a professional appraisal market value of $500K.

You have a mortgage balance of $200K.

80% of $500K is: $400K.

$400K is what the mortgage company will loan you. So you ask for a $400K mortgage, but you want them to wire transfer the $200K into your checking account.

Once the $200K is in your checking account, you can use the funds.

You don't need a HELOC to get the $200K. In fact, you don't want the HELOC in this case, because you would have to make two loan payments each month. One for the mortgage and the other for the HELOC. This way, you would have just payment for the $400K. Yes, it will be a higher payment than your current mortgage, but still less each month than paying off a $200K HELOC, plus your mortgage.
Very informative.
Never would have thought of that!
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Old 10-12-2019, 09:11 AM
 
Location: New Jersey
8,793 posts, read 12,744,262 times
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Quote:
Originally Posted by rummage View Post
I don't agree with that. What the OP wants to do isn't unusual. It is best to shop around for a mortgage company/bank that will understand the OP's needs and present workable options.

The fine print can have stuff that is punishing if you don't follow the rules. Also, you sign your name to these documents and you should not lie, which opening yourself up to more trouble for no good reason.

If the OP wants to purchase a second home, it matters if the home is already there vs. buying land and having one built. Purchasing a second home which is built is better because you are adding an asset they can easily sell if you default on the loan. But empty land with perhaps a half-built house has far less value to them.
I worked for 46 years in banking.

If any client said that they wanted to buy a house with the proceeds of this loan and then sell, we would deny the loan based upon our policies. Remember this loan does out out of pocket costs that the bank adsorbs and the loan needs to be on the books long enough for the bank to recover those costs and make a profit.
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Old 10-12-2019, 09:14 AM
 
Location: New Jersey
8,793 posts, read 12,744,262 times
Reputation: 8520
Quote:
Originally Posted by rummage View Post
Let's say your home has a professional appraisal market value of $500K.

You have a mortgage balance of $200K.

80% of $500K is: $400K.

$400K is what the mortgage company will loan you. So you ask for a $400K mortgage, but you want them to wire transfer the $200K into your checking account.

Once the $200K is in your checking account, you can use the funds.

You don't need a HELOC to get the $200K. In fact, you don't want the HELOC in this case, because you would have to make two loan payments each month. One for the mortgage and the other for the HELOC. This way, you would have just payment for the $400K. Yes, it will be a higher payment than your current mortgage, but still less each month than paying off a $200K HELOC, plus your mortgage.
I would not recommend taking out a new mortgage as they will def have up to a total of 10k in closing costs.
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Old 10-12-2019, 03:33 PM
 
766 posts, read 1,241,633 times
Reputation: 475
Quote:
Originally Posted by camaro69 View Post
I worked for 46 years in banking.

If any client said that they wanted to buy a house with the proceeds of this loan and then sell, we would deny the loan based upon our policies. Remember this loan does out out of pocket costs that the bank adsorbs and the loan needs to be on the books long enough for the bank to recover those costs and make a profit.
What questions do I need to ask about the HELOC when the plan of action is to sell the first house and pay off the HELOC?

Obviously I want to keep the time period between the purchase of the second house and the sell of the first house to be as short as possible to minimize costs to me.
There will undoubtedly be an overlap of at least two or three months or even more if the economy takes a nose dive.

If I anticipate purchasing in 2020, should I wait until early 2020 to get the HELOC given that there is an annual maintenance fee?
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Old 10-12-2019, 11:31 PM
 
9,595 posts, read 15,223,860 times
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There's such a thing as a bridge loan specifically for this purpose (using current house to pay down payment on new house). Higher interest than a HELOC though.
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Old 10-13-2019, 01:58 AM
 
Location: New Jersey
8,793 posts, read 12,744,262 times
Reputation: 8520
Quote:
Originally Posted by ieee488 View Post
What questions do I need to ask about the HELOC when the plan of action is to sell the first house and pay off the HELOC?

Obviously I want to keep the time period between the purchase of the second house and the sell of the first house to be as short as possible to minimize costs to me.
There will undoubtedly be an overlap of at least two or three months or even more if the economy takes a nose dive.

If I anticipate purchasing in 2020, should I wait until early 2020 to get the HELOC given that there is an annual maintenance fee?
1) As long as your income can support all debt, you can tell the bank the use of the funds are for home improvement and to have a reserve.

2) Just make sure there is no penalty for paying off early.
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Old 10-17-2019, 12:14 PM
 
623 posts, read 606,310 times
Reputation: 403
Quote:
Originally Posted by ieee488 View Post
I went on bankrate.com and wasn't able to find anything.
I must not have been inputing the numbers correctly.



How did you find this?
Right on their site:

https://www.spencersavings.com/loans...-equity-rates/
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