Quote:
Originally Posted by Jimmy Stang
I've got a similar question. My wife and I have been musing about moving into a slightly larger home, but possibly keeping the existing home as a rental property (or selling it at a future date, market permitting).
Suppose our existing house is worth about $420k, and we owe maybe $170k on it. And we'd probably want to buy something for about $550k. Is it possible to use some of the equity in the existing house to put down on the new one? Obviously a lot of this will depend on our household income, etc., which I could provide via PM if that would help assess the situation.
And I'll be honest, my motivation is partly that I'd like to have a second property to build some equity and eventually income. But the idea of having an overlap between my current home and possible new home is appealing. It would allow for time to renovate both homes, if necessary, and would also permit us to find a new home without the pressure of having to find an interim arrangement if we didn't find the "right" home, etc.
It might not even be possible in our situation, but I thought I'd float the question here. Feel free to reply here with general details, and then we can talk more personal stuff via PM or email if you'd like.
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Hi Jimmy,
Yes it is possible to use some of the equity in the current house for the purchase of the NEW home. Depending on the current mortgage setup, we would look at a refinance to assist in qualifying (if needed) but to also ensure you are cash flow positive for renting.
You can refinance up to 80% of the current home to access the equity. Based on $420,000 value, you would be able to refi up to $336,000 getting access to $166,000.
This will give you 20% down payment ($110,000 on $550,000 purchase) on the new home and some extra if needed for renovations you were talking about.
Look forward to hearing from you ~ Tim (will PM as well)