Home Equity To Purchase Property
Hi there - any advice you can offer a newbie greatly appreciated. Looking to buy a foreclosure at auction and wanted to tap into home to do so. Problem is have very little equity in our current two-family home, mortage of 319K and appraised value of 370K. Have been offered a 100% home equity loan at over 12% by a e-loan company but that is an interest only payment. Afraid to take such a leap, but feel we have no other choices. Rate on first mortgage is 6.5%. Any suggestions on moving forward greatly appreciated. Our FICO score is around 620. If we get outbid at auction, at least having the cash in waiting would be beneficial for future opportunities, foreclosures or not. HELP! :-?
i took a equity loan on my property last year. I did it threw my credit union and made the equity lie for 95% of the apprised value, i ended up with about 44,000 and i bought my first investment on an auxtion on-line for 44,800.00 paid cash.
because of my credit history, and being around the 700 range, the interest is a varible, currantly at 7%
using the # you gave above and doing 95%of the appraised vallue, that will give you 32,500 to work with. make a decent down on a multi unit.
John
Thanks for that John. My bank however will only lend 60% of appraised value as it is a 2 family. Have you (or anyone else) heard of banks that lend 100% on two-families?
You want an equity line, not a loan.
The rates on a line are much lower than a loan, and with REI lower payments = more income.
Now, the difference between the two is a line is adjustable, while the loan is fixed.
So the obvious downside to the line is if rates suddenly begin to soar, your payments will balloon. But you can always refinance to a fixed rate when that happens. And by then, you'll be refinancing less money because you'll have been paying down the line.
I recently got a 100K line on my house at 3.5% from Fleet in Boston. The equity loan was 7%. No brainer.
Also, be sure to get the line/loan soon, before you make an offer on a property. If the bank finds out your using it to purchse RE, they'll jack up the rate.
Good luck.
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Thank you! I'm going to start shopping around for that line of credit. You've inspired me when I was going around in circles!
I currently have an equity line of credit on a duplex. The rate is 4%, it is an investment property. I got this from my local bank where I have my checking and savings accounts. It is only at 80%. But they did offer me 100% on my primary. The rates are so low right now, this might be a good option for you.
Lori
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