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home equity loan or sell current house to buy house across the street?

Profile picture for David2005Ana
Hello, my wife and i own a $95,000.00 house that has only $15,000.00 left on the mortgage. my question is..would it be advisable to get a home equity loan or sell the house outright because we are looking to buy the house across the street from a friend of ours who wants to sell it to us. our current house is in parela sosa, guzman abajo in rio grande puerto rico.
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September 10 2009 - Rio Grande
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Profile picture for wetdawgs
There are several things you need to consider on this subject. To get you rolling

a.  Do you wish to own two homes?
b.  Do you have the financial resources to carry either two mortgages or a HELOC and the current mortgage?
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September 10 2009
Profile picture for David2005Ana
yes i can carry both mortgages if it came to that. but we do have a renter that will pay the mortgage on the first house. the problem i think there could be in doing this, would be that i have been in canada for a few years now so the credit is not as perfect as we like it.
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September 10 2009
Profile picture for David2005Ana
i should add too that i am paying 800.00 rent up here now plus the mortgage on our house in puerto rico. 
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September 10 2009
Profile picture for agentblu15
If time is not an issue, and your friend is willing to hold the 2nd house for you until you find a buyer for your current house, I think selling would make the most sense.  If you're planning to rent the first home to cover the mortgage, and aren't going to be seeing a significant profit from the rent, there's really no reason to keep the home.  Even if rent covers the mortgage, you'll end up bleeding money into it for repairs, upkeep, etc., without getting anything out of it.

On the other hand, if the rental income will actually net you a decent profit, or if time is an issue and you don't have a buyer lined up, you may be better off doing the HELOC now, putting the property on the market while its rented, and then if/when it sells, just use the proceeds to pay off the HELOC.
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September 10 2009
 
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Discussionhome equity loan or sell current house to buy house across the street?
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