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Can equity in a condo be used as a down payment on another property?

I'm not ready to move but want to hang onto the property for investment.
  • July 23 2012 - US
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Answers (1)

That's a tricky question given the ultra-conservative lending world we're currently living in.  The best answer is, "It depends."  Do you own the condo free and clear or do you have enough equity to scrape up a down payment?

If you own it outright, a local bank will most likely be your best bet.  They'll place a lien on the condo and your purchase property and make sure that the loan amount is within their Loan To Value guidelines for lending.

If you don't, then there is a whole new set of rules for renting out the property.  For instance, you'd have to have at least six months payments reserves in a bank account to cover months that you may not have it rented.

Your best bet is to speak with a local bank -- they are more open to non-cookie cutter type loans.
  • July 23 2012
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