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Old 07-13-2020, 08:33 AM
 
396 posts, read 430,054 times
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Hello, please bear with me if my questions seem silly! First time dealing with home loans. Is it possible to get approved for a HELOC loan and a mortgage at the same time? I am looking to purchase a new home before selling my current home. I do not currently have a mortgage, but my dti (mostly due to ridiculously high real estate taxes) was too high for me to be able to utilize enough equity in the home. So, I was thinking I could apply for a mortgage and pay it back once my current home sells. I have already started the HELOC application. Is this doable?

Last edited by jego914; 07-13-2020 at 09:51 AM..
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Old 07-13-2020, 10:53 AM
 
3,805 posts, read 9,291,313 times
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Quote:
Originally Posted by jego914 View Post
Hello, please bear with me if my questions seem silly! First time dealing with home loans. Is it possible to get approved for a HELOC loan and a mortgage at the same time? I am looking to purchase a new home before selling my current home. I do not currently have a mortgage, but my dti (mostly due to ridiculously high real estate taxes) was too high for me to be able to utilize enough equity in the home for what?.

So, I was thinking I could apply for a mortgage and pay it back once my current home sells. I have already started the HELOC application. Is this doable?
Your mention of debt ratio issues is confusing. How are you doing something that you initially say you cant?
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Old 07-13-2020, 11:28 AM
 
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I had assumed I would be able to access 85% equity of my home but was only preapproved for about 50%.
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Old 07-13-2020, 11:36 AM
 
396 posts, read 430,054 times
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Originally Posted by Pfhtex View Post
Your mention of debt ratio issues is confusing. How are you doing something that you initially say you cant?
I can get a HELOC for 50% of the home equity, rather than 85%, which is what I thought I would get approved for.
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Old 07-13-2020, 12:32 PM
 
Location: Phoenix, AZ
6,320 posts, read 4,799,501 times
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Here's why I think that happened based on my own experience. The lender figured you would borrow the money, buy another house, sell yours and pay off the loan quickly. The lending industry vultures don't like that because they don't make any money. That's why you got a 50% offer, to put the kibosh on your ability to buy another home.


An alternative is pick your next house and get a mortgage on that house. Then sell your old house and pay off the mortgage on the new house. Just don't be telling the new lender your plans to pay off the loan after the sale of the old house. Also be aware that your new mortgage might have a pre-payment penalty.
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Old 07-13-2020, 12:47 PM
 
396 posts, read 430,054 times
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They said it's because I do not have the income to qualify for the 85% in equity, even though I own my home outright. They said they based the loan number on my income, which I don't understand. Isn't the home my collateral should I be unable to pay back the loan?
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Old 07-13-2020, 03:12 PM
 
11,230 posts, read 9,198,187 times
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Originally Posted by jego914 View Post
They said it's because I do not have the income to qualify for the 85% in equity, even though I own my home outright. They said they based the loan number on my income, which I don't understand. Isn't the home my collateral should I be unable to pay back the loan?
Yeah, but they don't want to plan on seizing your house. That costs a lot of money and trouble. They want you to pay your loan.


The whole scheme sounds hinky to me; borrow up to 85% of the equity in your current (owned free and clear) house, then use that as a down payment on a loan for a second house? Is that the idea? Basically you've got two loans running at once - one for the home equity loan used for the down payment, and the other the main mortgage. Your lender(s) - and it'll be fraud if you don't disclose the home equity loan used as a down payment - will want to ensure you can pay both loans at once. It's probably no good saying "oh, but I'm going to sell house 1" - if I were in their shoes I'd say "fine, sell house 1 and come back to us with actual money for your down payment".


I know there are all kinds of "creative financing" out there, but I think this is what's happening. The lenders don't want you unable to pay both loans at the same time for an extended period.
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Old 07-13-2020, 04:24 PM
 
396 posts, read 430,054 times
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Quote:
Originally Posted by turf3 View Post
Yeah, but they don't want to plan on seizing your house. That costs a lot of money and trouble. They want you to pay your loan.


The whole scheme sounds hinky to me; borrow up to 85% of the equity in your current (owned free and clear) house, then use that as a down payment on a loan for a second house? Is that the idea? Basically you've got two loans running at once - one for the home equity loan used for the down payment, and the other the main mortgage. Your lender(s) - and it'll be fraud if you don't disclose the home equity loan used as a down payment - will want to ensure you can pay both loans at once. It's probably no good saying "oh, but I'm going to sell house 1" - if I were in their shoes I'd say "fine, sell house 1 and come back to us with actual money for your down payment".


I know there are all kinds of "creative financing" out there, but I think this is what's happening. The lenders don't want you unable to pay both loans at the same time for an extended period.

A scheme?! Are you serious? I have no debt and own my home, free and clear. I don't do schemes. I planned on using the HELOC to purchase the new home, but I thought I could utilize more equity than 50%. I had no intention of considering a mortgage. Both the HELOC and mortgage would be paid off once my home sells and I live in a seller's market. So, not sure what "scheme" you are talking about.

Last edited by jego914; 07-13-2020 at 04:48 PM..
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Old 07-26-2020, 07:45 PM
 
43 posts, read 89,727 times
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So what did you end up doing? How did this work out?
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