I have quite a bit of equity in my house, but I need to move. Since the market is softer than an ice cream bar on a Phoenix sidewalk in August, our realtor suggested I put the place up for rent for a year and try again when things recover. Meanwhile, I kinda need the 100K+ I have in the house, so I was thinking of taking my lender up on those weekly offers I get about cashing out equity (second mortgage). Now, at the time I signed the first set of papers, it was owner-occupied. While signing for the second, it'll also be owner-occupied -- although that is bound to change shortly after. Will this come back and bite me in any way? It seems like it'll be no big deal as long as I make the payments, but what if I get in accident, lose my job etc. and end up foreclosing in say 9 months? Just trying to run worst-case scenarios ahead of time, so any input is appreciated. I'm in WA by the way.
2007-10-25 07:40:47 · 4 answers · asked by Bellevue Bob 1 in Business & Finance ➔ Renting & Real Estate
I obviously TRIED selling it -- three months, cut price twice, zero showings for the past month despite being 40-50K under comps.
2007-10-25 07:47:51 · update #1
Yes, it will come around to bite you in the rear. If you need to move, I'd suggest renting until you get the sale of the home to pay off your lender. Only after you sell the home, pay off the lender, then you determine how much you have left to put down on another home. So your safest bet at this moment is to fix your home looking nice so that it appeals better than all the other homes on the block (yes, it is a competition and there are a lot of homes competing). Really, if you are tight on money, swallow your pride and live in a lower class for awhile. I.E. cheaper car, or use public trans., cheapest apartment you can find, clip coupons, eat cheap and eat less.
If you take out equity and if you sell your home under what you owe, then you will be very sorry you did this!!
2007-10-25 08:47:44 · answer #1 · answered by mulderlx 2 · 0⤊ 0⤋
The difference between owner-occupied versus non-owner-occupied loans (lower allowable LTV, higher interest rates, etc.) is due to the possibility that you won't have the property rented out all 12 months of a given year. In fact, if you do rent out a property, most loan companies only count 75% of that rental income as part of your total income.
If you take out an owner-occupied loan, there is a statement you have to sign (in California, anyway) declaring that you intend on occupying the property being used as collateral for the loan. If you haven't started the process of renting it out, you can with 100% certainty say that you intend on occupying the property (they don't ask you how long you intend on occupying the property, just whether you do). Then, when the loan comes through, you can move out and begin renting the property.
I did this several years ago. My wife owned a condo that she lived in and, when we got married, we decided to buy a house using a second on her condo as part of the down payment. Since it was her current residence (she occupied the condo), filled out and signed the statement truthfully: that she intended on occupying the property (it didn't ask how long). As soon as the loan funded, we went looking for and found a house to buy.
No one ever questioned us about what we were doing, even when we changed the mailing address for the loan statement 3 months after taking out the loan.
2007-10-25 15:55:27 · answer #2 · answered by Paul in San Diego 7 · 0⤊ 0⤋
If it were me, I'd sell my house and take the $100k.
Taking out additional loans sounds risky to me (if you can even get them these days), although if these are tax deductible, it may be worthwhile.
2007-10-25 14:45:59 · answer #3 · answered by G 2 · 0⤊ 1⤋
Its easy just contact a cash home buyer and you will have a deal.
2014-09-27 03:37:13 · answer #4 · answered by Bhaskar 2 · 0⤊ 0⤋