Home Buying in Charlotte>Question Details

ltbrunson, Both Buyer and Seller in Charlotte, NC

Is it possible to leverage the equity in my current home to purchase a new home in a different city (before the old home sells)?

Asked by ltbrunson, Charlotte, NC Sat Apr 13, 2013

Current home is in Silver Spring, MD
Moving to Charlotte, NC metro area
Estimated equity: Approximately $150k- $160k
Timing is a factor due to school-age children (school ends in MD the middle of June; school begins in NC in early to mid August); Wife and children will remain in MD until school's out in June, so that is a tight window to sell before August.
Could possibly carry two mortgages or rent temporarily, but would prefer an alternative solution

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Your first task is to talk to a mortgage lender to see if you can qualify to carry both mortgages. For you to use your equity in your first home to buy the second home, you would have to take some sort of home equity loan to pull that money out and, as a real estate professional, and not a lender, I am in no position to tell you whether that is even a possibility or not. Again, talk to a lender and explain your plans. Only an experienced lender, armed with all your financial information can give you the answers you seek.

As far as going ahead and renting here, be aware that not only is our current inventory of homes for sale at a 10 yr low, but also, the rental market is very tight and you will have to make a quick decision if you see a property that you like.

Good luck to you and your family - you will absolutely love living in Charlotte!

All the best,
Kathleen Turner, ABR, CRS, ePro, Certified Paralegal
The Kathleen Turner Realty Group
Keller Williams Realty
704-609-2688
KathleenTurnerRealty@gmail.com
1 vote Thank Flag Link Sat Apr 13, 2013
That is a great comment Itbrunson in Charlotte, NC
0 votes Thank Flag Link Tue Jun 18, 2013
Good morning, Ltbrunson:
First thing to do is to find out what a lender is willing to do for you in NC. You need to know if your new employment will qualify you for a mortgage and if so, what price home you can afford based on two mortgages and alternatively, based on the sale of your existing home. Depending on if you can get a loan and it is big enough to allow you to buy the home you want/need without selling, you can make the decision if you sell or refinance your existing home.

If you cannot get a new loan for your NC home, I would explore a home equity line of credit or a cash-out refinance on your existing home. Then you would have the option of renting or paying cash for your Charlotte area home. If you pay cash, it probably will be less of a home than you want and you should consider it a short term (2 year) situation and to be prepared to make significant trade-offs.

I would only consider delaying the sale of your existing home if home prices are going up significantly faster in your area than they are in your preferred Charlotte areas, OR if your Charlotte home will be significantly lower priced than your existing home and you are confident that interest rates will remain stable during the time you are waiting.

With $150k- $160k equity, you can price to sell - even if you discover that your estimate of equity is too optimistic/high (many sellers in NC are still struggling with lower than expected valuations). If you are uncertain about valuation or disagree with a listing price suggested by your real estate agent, you should pay for an appraisal I'd list your current home 3 to 5% below appraisal immediately and during contract negotiations, make sure the closing date is after the mid-June. Then I'd work to find a home in NC that could close late June. We have assisted many clients successfully complete exactly this transaction. If you have a full time agent with a Masters degree in Planning with Finance and over two decades of experience, working for you, you will likely do better in negotiations. I'd be pleased to discuss this further and provide service in NC. If you appreciate this answer, please give it a thumbs up, or if this was the most helpful answer, please say thanks with a best answer click.
0 votes Thank Flag Link Mon Apr 15, 2013
Yes you can leverage the equity in your current home and use it to purchase your new home in NC. If you do this, you will certainly obligate yourself to a higher mortgage payment on the home in MD. Do you have good indication that the home will rent for the higher rental amount pending the mortgage rate is higher once you take out the equity and use it as a down payment on a new home? Also, consider if you rent out your home in MD and it's less than one calendar year, the income you receive on that home will not be counted as income so the entire mortgage on the home in MD will count against your debt to income ratio. So here is my suggestion: Rent out the home in MD, Move to NC, rent in NC for a year or so until you learn the area, then purchase. Try to also sell the home in MD too if this is your desire. Thanks,Aimy
0 votes Thank Flag Link Sun Apr 14, 2013
ltbrunson,

The recommendations you have gotten here are valid. A mortgage lender will be best able to answer this question for you. But the answer is yoou can do what you want to do legally and ethically. I have had people do it before. They own a house in one state and take an equity line against it to buy a home in another state and then sell and pay off that loan.

The question is not whether you can do it; but whether your income will support the equity line and the amount you can actually borrow. Most banks will not let you borrow 100% of the equity in a house anymore and you have to qualify to pay it back based on your income.

The first thing to do is talk with soemone about how much you can borrow against the house. Then contact me to help you find a home down here that meets the criteria you are looking for in a house at the price point you want. beucase you are going to want to make sure that you can find soemthing down here that you will like and want to live in with yoru family for the budget you have projected.

There are plenty of homes down here in that price range but like i said it depends on what you want in the house and location.

if those options work out then you work on the equity line at the same time you are looking for a hosue to put an offfer in on one....I have helped other people do this before and made it work.

The other options are to put yoru home in maryland on the market now with a contingency if you get an offer that you are not closing until school lets out in june. While doing that contact me to send you homes to view which would or could be at the price point of paying cash or slightly higher if you do not see anything you like.

The last option is to sell and rent down here for a few months in an area you want to send your kids to school...but this is tough becuase if you are like me (i have 4 children) when I moved I did not want to move them more than once from one school to another school. Then you are limiting the choices you have and need to find a rental in the school distrcit you want to buy in......My experience is that it does not work out well that way.

I would be happy tot discuss with you further...feel free to either e-mail me back directly or call me at 704-519-7895.

Dave diCecco
Realtor/Broker
Coldwell Banker United
Cell:704-519-7895
ddicecco@cbunited.com
http://www.davedicecco.com
0 votes Thank Flag Link Sat Apr 13, 2013
Welcome to Charlotte!

Your best bet would be to talk to a lender, who could best tell you what you could do with your finances given the amount of equity you have to help you reach your goals. They would have to analyze your credit, debt and income in order to qualify you. Email me directly if you'd like help with your move or need a great lender contact.

John Siddons
john.siddons@prucarolinas.com
0 votes Thank Flag Link Sat Apr 13, 2013
Yes, you can leverage the equity in your home. A home equity loan is a great idea.

It looks like you have a tight window here. I would put the property in MD on the market right now and make the sale contingent to occupancy until the middle of June. If your home sells before you move to NC then you can remain in the home, though you should expect to pay "rent." The sale of your MD home will give you the cash to purchase a home in NC.
0 votes Thank Flag Link Sat Apr 13, 2013
If you are 62 and over, you can do this with a reverse mortgage. Best next action is to ask a local Mortgage Broker by clicking "Find a Pro" in the main menu at the top of this website. http://www.naplesrealestateguys.com/
0 votes Thank Flag Link Sat Apr 13, 2013
It's certainly possible you could get a home equity line of credit which would enable you to have the money necessary to put down and finance the second home, but you would want to sit down with a lender and have them confirm whether you'd qualify to carry both mortgage payments and the line of credit payment if necessary. You want to know these numbers yourself to determine if you're going to be comfortable carrying them as well.
0 votes Thank Flag Link Sat Apr 13, 2013
Do you have continuous employment?

Banks won't approve you for a mortgage without proving stability of employment and income.
0 votes Thank Flag Link Sat Apr 13, 2013
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