I am planning on buying a home for $50K that is appraised at $70K - how can I pull out the $20K in equity? Also, would the method be different if I owned the home for, say, 1 year instead? Thanks.
2007-07-31 05:16:54 · 5 answers · asked by Steve W 2 in Business & Finance ➔ Renting & Real Estate
it's not clear why you would want to do this as it's a pretty risky undertaking.
you could buy at the appraised price and ask the seller to credit you back the $20K.
you could use 100% financing, usually an 80/20 or 75/25, again, buying at the fully appraised price.
you could buy the house at $50K, wait about 3-6 months, and take out a HELOC (home equity line of credit) to 100% LTV.
remember that many lenders are scaling back on this kind of financing as it causes problems down the road for most homeowners.
i'm in california!
2007-07-31 05:37:52 · answer #1 · answered by chieko 7 · 1⤊ 0⤋
In the conventional market (the lowest rates-best loans), your home is worth what you paid for it for the 1st 6 months to a year. It doesn't matter that it appraised higher - the purchase price is the value (and your loan was based upon the lower of the purchase price or appraised value). After a year you can use the new appraised value.
Here is a suggestion: try your local bank. Often they can put a loan together for you based upon the appraised value. You may pay a higher rate and it may not be fixed but at least you can get a loan. Credit Union's are a good place to start.
2007-07-31 12:32:10 · answer #2 · answered by thinking-guru 4 · 1⤊ 0⤋
With the state of the mortgage market right now, it is going to be hard to get more than another $6,000.00 out of your house. That is 80% of the $70,000 appraised value.
What is causing all the foreclosures is deals with 100% financing and the homeowner gets in trouble and just walks because they have no equity in the home.
2007-07-31 12:21:06 · answer #3 · answered by Tim 7 · 1⤊ 0⤋
There are lenders that will loan 100% of value one day after you buy the property, but the rate will be soooooo high it will knock you in the dirt. So, if you can be patient, You should own it for a year before you attempt to get your equity.
2007-07-31 12:32:08 · answer #4 · answered by Brain 4 · 0⤊ 0⤋
You might be able to get a home equity loan for some of the extra $20K, but not all of it.
2007-07-31 12:22:25 · answer #5 · answered by Judy 7 · 0⤊ 0⤋