Posted by Learner on March 25, 2008, 3:43 pm
HI,
We already own a home in Detroit and we moved out of MI on job
purposes. So we rented out our Detroit home for 2 years so should be
(hope fully) good until 2010 Feb. Now we are in process of paying off
our Home equaity line of credit as quickly as possible and if things
work out well it will have paid (48Gs) by the end of Dec '08. We can't
sell it because of the worest housing market. We should be ready to
loose atleast 60G - 70G if we were to sell so thinking to keep it for
couple of more years or until it gets any better.
Now that we comming back to Detroit is very remote and we will have
to buy a home for our selves where ever we moved on a permanent basis.
Right now we are working in different states on a temporary basis and
should potentially move to NC eventually as we would have more
oppertunities for our skillset. And our paln is to buy a home some
time in the spring of 09 (or a little later or sooner depending on
the market conditions so that we could take advantage of this current
housing slump). By then according to our plan we will have completely
paid off our first home equity line of credit (Detroit home) and still
should have around 10K , 15K in savings. So if we were to buy a 300K
home (this will be a second home) again in NC then, as a thumb rule we
should be able to make 20% down payment towards our second house and
which we may not be able to do it according to our calculation. So my
question is SHALL WE USE OUR FIRST HOME EQUITY LINE OF CREDIT (as we
will have paid the full 48Gs and if not whole atleast a portion of
it?) TO MAKE A DOWN PAYMENT ON OUR SECOND HOME? Because no way we
could have earned that much money (60Gs) by that time after paying off
our first home equity line of credit. If we can't use it then we may
have postpone of buying a second home until we have saved that 60G.
Please advice.
Thanks,
-L
Posted by John Weiss on March 25, 2008, 4:53 pm
> SHALL WE USE OUR FIRST HOME EQUITY LINE OF CREDIT (as we
> will have paid the full 48Gs and if not whole atleast a portion of
> it?) TO MAKE A DOWN PAYMENT ON OUR SECOND HOME? Because no way we
> could have earned that much money (60Gs) by that time after paying off
> our first home equity line of credit. If we can't use it then we may
> have postpone of buying a second home until we have saved that 60G.
NO!
You should never borrow $$ to fund a "cash" down payment. Besides, you will
encumber the old house so that it will be harder to sell if your renter moves
out and you can't find another one. Further, if you default on the loans, you
could lose BOTH houses to foreclosure!
Maybe by next year the housing market will be such that you can buy a house with
less than 20% down on reasonable terms. Otherwise, just wait until you can save
the cash.
Posted by Stan Brown on March 26, 2008, 6:13 am
Tue, 25 Mar 2008 13:53:58 -0700 from John Weiss
> You should never borrow $$ to fund a "cash" down payment.
And most banks want proof that you didn't. For example, when I
applied for my mortgage (20% down payment), I had to show several
months' back bank statements to show that I had not just acquired the
money.
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com
Shikata ga nai...
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> will have paid the full 48Gs and if not whole atleast a portion of
> it?) TO MAKE A DOWN PAYMENT ON OUR SECOND HOME? Because no way we
> could have earned that much money (60Gs) by that time after paying off
> our first home equity line of credit. If we can't use it then we may
> have postpone of buying a second home until we have saved that 60G.
NO!