Equity Rich...Cash Poor (contingency, clause, sale, fees)

[cheleski68]

we moved, and rented in a new city. 2 kids in school. house sold AFTER we moved. we chose to rent bc we bridge loaned before. it worked out but the stress and the worry were not worth it. we'll never ever do it again. rent, take your time checkin out the area. go to craiglist and live off of the bare minimum and keep your stuff in boxes. it sucks but the peace of mind is worth it...but beware of landloards who are in foreclosure!!!! ask for a letter of good standing from their mortgage holder and to see where THEIR credit is! take it from a person who's landlord is a realtor. short sale/foreclosure situation forcing us out prematurely..in the middle of the school year..but i would STILL rather rent then bridge it inspite of it all!

[pghquest]

Originally Posted by AnthonyB

The HELOC is just a second mortgage. You are advocating taking a second mortgage to pay off the first. When the house sells he still has to pay them all back. It doesn't stop the bleeding, or give him his equity, it just moves money around to make it all look OK.

Much better to price to sell now and walk away with what he can get. The OP already said he had significant equity. He does have wiggle room, and the market is hardly skyrocketing right now.

What I said was get a HELOC to pay off the first mortgage, leaving ONLY the HELOC, not in addition to it. Replacing the mortgage with a HELOC leaves the HELOC as a first mortgage. Taking out a second mortgage would be stupid..

Often, depending on the amount of equity in the property, you can get a HELOC on property 1, and use that to buy another property, paying off the HELOC when the first property sells. I've done this several times. It keeps me in the driving seat, without being forced to sell below market, and keeps one mortgage in place, keeping the new home mortgage free.

[Lauren Roberts]

Originally Posted by pghquest

What I said was get a HELOC to pay off the first mortgage, leaving ONLY the HELOC, not in addition to it. Replacing the mortgage with a HELOC leaves the HELOC as a first mortgage. Taking out a second mortgage would be stupid..

Often, depending on the amount of equity in the property, you can get a HELOC on property 1, and use that to buy another property, paying off the HELOC when the first property sells. I've done this several times. It keeps me in the driving seat, without being forced to sell below market, and keeps one mortgage in place, keeping the new home mortgage free.

We did the same recently. This scenario promotes you as a stronger buyer and if you work out the timing, you can have the HELOC paid off before you have to make the first payment.

[pghquest]

Originally Posted by Lauren Roberts

We did the same recently. This scenario promotes you as a stronger buyer and if you work out the timing, you can have the HELOC paid off before you have to make the first payment.

Glad to see someone knows what I'm speaking of. It essentially makes you an all cash buyer for the new property, giving you tons of leverage.

I've begun looking at buying properties this way, then after closing going and getting HELOC's, getting my cash back and extra funds to repair. This frees up my capital to go to the next deal immediately and gives me better buying power.

[stevep]

Originally Posted by pghquest

What I said was get a HELOC to pay off the first mortgage, leaving ONLY the HELOC, not in addition to it. Replacing the mortgage with a HELOC leaves the HELOC as a first mortgage. Taking out a second mortgage would be stupid..

Often, depending on the amount of equity in the property, you can get a HELOC on property 1, and use that to buy another property, paying off the HELOC when the first property sells. I've done this several times. It keeps me in the driving seat, without being forced to sell below market, and keeps one mortgage in place, keeping the new home mortgage free.

I disagree... taking out a Heloc as a second is not stupid if you only use it in emergencies. For ex: if 5 months down the line the home hasn't sold and there isn't any cash to pay the mortgage, the heloc will save you from foreclosure. If I'm reading it correctly, your method in the 2nd paragraph is really doing the same thing but I wouldn't recommend buying a 2nd property until the first one is sold.

[pghquest]

Originally Posted by stevep

I disagree... taking out a Heloc as a second is not stupid if you only use it in emergencies. For ex: if 5 months down the line the home hasn't sold and there isn't any cash to pay the mortgage, the heloc will save you from foreclosure. If I'm reading it correctly, your method in the 2nd paragraph is really doing the same thing but I wouldn't recommend buying a 2nd property until the first one is sold.

Well for the OP, who states they only had 5 months of cash left, getting a 2nd loan in 5 months would be very difficult if not impossible. They would have moved to a new state, started a new job, and broke. One must stop the bleeding now, before the OP moves, and do so in a way that they dont get raked through the coals.

As for buying a 2nd home, that one is up for discussion, and it would depend on how much equity they have, which isnt known. I would consider buying a 2nd home, if there was enough equity in the first, if not, then its anyones guess as to what to do because there isnt enough info provided.

[stevep]

Originally Posted by pghquest

Well for the OP, who states they only had 5 months of cash left, getting a 2nd loan in 5 months would be very difficult if not impossible. They would have moved to a new state, started a new job, and broke. One must stop the bleeding now, before the OP moves, and do so in a way that they dont get raked through the coals.

It doesn't take 5 months to take out a HELOC. It should only take approximately 1 month.

[pghquest]

Originally Posted by stevep

It doesn't take 5 months to take out a HELOC. It should only take approximately 1 month.

um.. thats my point in doing it now, while he has a work history, and not hurting for funds.. If he waits for 5 months to obtain one, he'll be broke (per his posting) and then have to draw on his equity to live, not a good situation to be in.

p.s. I get HELOC's done from first call, to closings in about 5 days.. Doesnt even take a month.

[stevep]

My mistake... I misread your post - I thought you were saying from start to finish it takes 5 months to get a heloc. Guess I shouldn't be reading the posts at night.

[ProLogic]

Renting is the way to go.