Profile picture for Lurgan

Using a Home Equity Loan For a Downpayment

Hello.

I currently own a home in Bedford MA    that has been appraised for 450K.  I have a remaining mortgage balance of 320K.  Is it possible to take out a home equity loan on this property and use the home equity for a down payment on a larger property.  The larger property will then become my primary residence and I will rent the first property.  The rental amount will be more than enough to cover the mortgage payment, taxes and the additional payment for the home equity loan/line.

Thanks all in advance, any input is greatly appreciated!
  • October 04 2012 - Bedford
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Answers (2)

Profile picture for Outer Banks N C
Absolutely it is possible and happens everyday. It will all depend how much your house appraises for and how much equity there is. Then the lender will decide how much home equity loan they will give you, don't expect to get all the equity as a home eq loan though. Maybe 75-80 % of it.

Tim
  • October 04 2012
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You can use the equity in current home to purchase new home. Most lenders will still count current mortgage in your debt ratio because you need a two year rental history for it not to be counted. Also you will need six months reserves for both properties.(retirement funds can be counted as reserves). Meet with a local lender to review your options.
  • October 04 2012
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