Profile picture for rs_nj

What is my best short-term liquidity option? HELOC?

We just purchased a home in New Jersey and are selling our penthouse in Manhattan.

To cover all the expenses of a new home (furniture, cars--now that we're not in Manhattan, etc.) and for comfort in carrying both mortgages for as long as necessary, I was expecting to get a home equity line of credit on our loft (we have about 60% equity in the loft). 

However, I was told that most lenders take 30-60 days to close and want the property off the market for 160 days. Although it hasn't been on the market since we purchased nearly 7 years ago, this is troublesome because we want to list the loft right after Labor Day.

I can pursue home equity on the new home. We just moved in, but we only put 25% down and many banks want an LTV of 80%, or even 75% (such as SmithBarney) in New Jersey for some reason. That doesn't give me much room (or any, in some cases) to wiggle.

I'm hoping to have access to $100,000 - $300,000 for piece of mind, though that is flexible. I would love to pay off my home mortgage with the proceeds from the loft and change over to a HELOC, but I will seek advice from my accountant before doing that. (I don't know much about the benefits of carrying a small mortgage, for example.)

Oh, quick update if this helps:
--loft estimated sale price $2.4 mil
--loft mortgage/HELOC combined $1.1 mil
--home purchase $1.15 mil
--home mortgage $862 K
--my credit fair (658) due to errant charge off currently in appeal, spouse credit excellent (850)
--no other debt at all
--combined income $275 K

What is my best option? Any help would be very much appreciated.
  • August 28 2009 - South Orange
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Answers (2)

IMHO your best course of action is to keep your expenses right now at the minimum. Utilize your current furniture and purchase 2 or maybe 1 older quality automobile until your penthouse is sold. Also, paying off your new mortgage at that time certainly will put you in a comfortable position.

There are portfolio lenders that only use the middle score of the primary income earner. Although, I'm assumming you are the primary earner.

Your 658 middle credit score will make it extremely hard to receive a HELOC or a cashout refinance on the Penthouse as a 2nd home or as an investment property. Also, most 2nd homes are lower valued than the primary residence.

I feel you are just going to have to "tuff it out" and hope the penthouse will sell quickly. .... Best wishes, Rudi
  • August 28 2009
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Profile picture for daveskow
there are no helocs out there for  homes that are not  primary residences

the fact its on the market will be  another strike  against gettng a  heloc ( as you noted

third strike on heloc idea is the credit scores
  • August 28 2009
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