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Old 11-27-2009, 02:08 PM
 
662 posts, read 1,729,943 times
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I have a 63,000 HELOC, and I am thinking of using this, plus cash I have in the bank to buy a 130,000 home, pay the lawyer and moving expense, title search, etc.

Then I am hoping to sell my apartment and pay off the HELOC.

This is to avoid bothering with a mortgage and closing costs.

The home is 'Buy Owner' so I would kind of like to come in with cash, if possible. There is a risk that I can't sell the apartment for enough to cover the HELOC (Who knows???) and I would be down to few thousand in the bank so I would be stuck. I would have 20,000 in the stock market I could sell if I absolutely have to, but would have to pay a penalty because I owned it less than five years.

Does this sound smart, somewhat risky, or dumb? I asked BofAmerica, who has the HELOC if they mind if I use it this way, and they said they don't care what I do with it.
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Old 11-28-2009, 05:58 AM
 
662 posts, read 1,729,943 times
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Me again. I think there is a good chance that I will not sell the apartment for enough to cover that HELOC.

Here is another idea--Is it stupid? Borrow 10-20,000 from my 401K, pay off the HELOC when I sell the apartment, then immediately take out a 10-20,000 HELOC on the new house to repay the 401K. This is in preference to selling the stock which will cost me a 5% penalty.

The other option is credit card cash advance.

The is the first house I will buy, the apartment was the first thing I ever bought. By the way--can anyone tell me how the apartment closing works? Does my lawyer take a check from the buyer to give to BofAmerica who will own the HELOC? (The original mortgage is paid off.)
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Old 11-28-2009, 08:11 PM
 
Location: Salt Lake City UT
61 posts, read 305,750 times
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Have you considered selling your apartment, then buying your first home?
That way you would not have upkeep & other costs for two places while you are waiting for your apartment to sell.

Rates are at historical lows if you don't have enough money to pay cash for your new home.
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Old 11-29-2009, 05:44 AM
 
662 posts, read 1,729,943 times
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Quote:
Originally Posted by charlesclark View Post
Have you considered selling your apartment, then buying your first home?
That way you would not have upkeep & other costs for two places while you are waiting for your apartment to sell.

Rates are at historical lows if you don't have enough money to pay cash for your new home.
Thanks for the reply--yes--I know they say you must do that--but that's so disruptive--I've thought of it, but I can't stomach the disruption to myself or my pets. How do people put up with that? If it was a house you are selling, and you put a lot of money into it, I could see.

They also say you must never never borrow from your 401K, but I can't see why not. It would save me that 5% penalty. Or high interest--My credit cards are 20-30%!

This question (thread) may be moot--the seller actually wants to sell the whole house now and I am interested in the idea, because there is a long term tenant in the other half.
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Old 12-03-2009, 02:11 PM
 
Location: New York
2,251 posts, read 4,720,866 times
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Hey Karen -

I was a loan officer for 10 years, over that time spoke with thousands of individuals about their situations, debts and goals.

Charles has a valid point, I also understand your tone describing a disruption for you and your pets.

What you are gaining by - borrowing from your 401k, cash advantages from your credit cards, even selling stock (stock market is currently low - taking a loss by selling).

A mortgage - interest rates are really low, mortgage interest is tax deductible, you can also keep your credit score/report alive. After 6myths to a year of no activity on a credit report, your score will become "NA" (no activity). Then you will have to rebuild your credit again.

It sounds like you would be a perfect candidate for getting a great loan, because you have assets. If you try pay everything off, you are basically closing yourself off from the world. No credit history, no credit score - many insurance and utility company calculate their fees based on your credit score. You could be doing more harm to your future than good.

I suggest you talk Charles - I know a lot of people in the banking business, a couple of years ago he helped with a home loan for a family member (69yrs old) in Nevada. The situation was impossible, with many issues and conditions. Charles went out of his way to help us. Here's his number 888 931-0007.
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Old 12-04-2009, 09:12 AM
 
286 posts, read 1,320,861 times
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Do not take a credit card cash advance to buy a house. That is just plain silly. And dumb... just my 2c!

Also, just because you are avoiding a mortgage and have very little debt, does not mean your credit score will become nill. Many gas companies / cell phone companies / etc will report to the Credit Bureau so you will still have a score. It is good practice to keep something ticking your report, but hey - if you can live debt free and be happy, that's what's important!
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Old 12-05-2009, 05:23 AM
 
662 posts, read 1,729,943 times
Reputation: 504
Quote:
Originally Posted by Modification Specialist View Post
Hey Karen -

I was a loan officer for 10 years, over that time spoke with thousands of individuals about their situations, debts and goals.

Charles has a valid point, I also understand your tone describing a disruption for you and your pets.

What you are gaining by - borrowing from your 401k, cash advantages from your credit cards, even selling stock (stock market is currently low - taking a loss by selling).

A mortgage - interest rates are really low, mortgage interest is tax deductible, you can also keep your credit score/report alive. After 6myths to a year of no activity on a credit report, your score will become "NA" (no activity). Then you will have to rebuild your credit again.

It sounds like you would be a perfect candidate for getting a great loan, because you have assets. If you try pay everything off, you are basically closing yourself off from the world. No credit history, no credit score - many insurance and utility company calculate their fees based on your credit score. You could be doing more harm to your future than good.

I suggest you talk Charles - I know a lot of people in the banking business, a couple of years ago he helped with a home loan for a family member (69yrs old) in Nevada. The situation was impossible, with many issues and conditions. Charles went out of his way to help us. Here's his number 888 931-0007.
Thank you so much for your replies, and Eusibius2, too. My sister took out a mortgage just three months ago, and everyone in my family said it was a terrible hassle, and slowed everything--and I wanted to just buy my house without a hassle!!!

The points you make about 'staying in the system' are valid, however. But it may be moot:

The seller wants me to buy the entire duplex, and if all goes well, I will make an offer next week. I will need to take out a 135,000 mortgage to add in the other half of this house. A tenant will (hopefully continue to) pay 1040/mo rent.

(I posted my questions about Coldwell banker above before I read these replies.)
Is Charles a mortgage broker? I live a long way from Nevada--I am in New Jersey. Should I call him?

Last edited by Karen59; 12-05-2009 at 05:34 AM..
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