Financing in Charleston>Question Details

Bryan David, Home Buyer in

can you use part of your home loan to pay other bills?

Asked by Bryan David, Mon Apr 2, 2012

If I am pre approved for a 250, 000 home loan, and end up purchasing a house for 200,000, can I take the full loan amount and use the remaining amount to pay off other bills.....such as vehicles?

Help the community by answering this question:


Hello Bryan,

No. However, later on, when you built equity in your house, you might take out a Home Equity Loan
and use it as needed. It has to make sense financially - because normally the car loans have low interest rates to start with, also - Home Equity Loan is tax deductible only if you use it to improve the house, not to pay off cars...

So, maybe you will be able to do a cash out refi instead (when there is enough equity).
This will be better because the rate will be fixed (instead of variable in HELOC situation), and you can also have very small closing costs or no closing costs when refinancing.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
0 votes Thank Flag Link Thu Apr 26, 2012
A Home Equity Loan may be fully deductible regardless of how the proceeds are used.

Because everyone's situation is different you should consult your tax advisor to determine the tax implications and/or you may refer to IRS Publication 936 for more information.
Flag Thu Apr 26, 2012
No. The actual loan amount will be based on the purchase price or appraisal, whichever is less. A less expensive home may free up some down payment or closing costs you could use to pay down other bills, but no conventional loan will fund for more than the purchase price or appraised amount.
A rehab loan will allow additional funds for improving the home, but these are closely watched and you need reciepts from the contractors to access the funds.
0 votes Thank Flag Link Mon Apr 2, 2012
It is possible, but you will need to speak to your lender about your specific situation.

The amount of money you are able to borrow against the house, using it as collateral, is going to determine how much money you may borrow. Not the amount that you were pre-approved for. It sounds like you are just purchasing the house and there may not be much equity though. Equity is the value of the home minus the amount you owe on the home. If you have equity in the home then it is worth speaking to a lender about a Home Equity Line of Credit which would permit you to borrow additional funds that could be used to pay off other bills.
0 votes Thank Flag Link Mon Apr 2, 2012
No, the only way to use any funds like that would be if you would refinance the home and it had equity left over. Most banks won't allow you to cash in on your equity after 6 months.

Basically your house is your collateral to the bank IN "trust" you will pay them.

0 votes Thank Flag Link Mon Apr 2, 2012
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