Home Buying in 08540>Question Details

Annmail1, Home Buyer in Princeton, NJ

Should I pursue a home equity loan to buy a second home, which is listed as a short sale?

Asked by Annmail1, Princeton, NJ Tue Sep 27, 2011

I own my $265,000 condo outright. I have no other outstanding debt, and my credit score is above 800. I am looking at a short sale listed at $209,900. I would live in the short sale home part time. It also has a studio apartment above the garage, which I could rent out for about $650. The home has been listed for 2 years (but I don't think it has been a short sale for that long). The sellers still owe $355,000 on it! Would my offer look more attractive to the 2 banks that have to accept the short sale offer, if I go with a HEL, instead of a mortgage, or do they not care how I finance it? I have a little over $100,000 ready to go, so I'd need to borrow $100,000 to pull it off, either way, with a mortgage or home equity. This is all new to me (short sale and HEL), so I need some advice! Thanks!

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Ronald Shaffery’s answer
Well it looks like you are in a great situation to pull this off. I agree with the previous answer, the HELOC should have lower closing costs and the short sale contract shouldn't be affected baed on the two options. The lower interest rate may come by putting down the $100k and getting a mortgage on the new home. I know a very good full time agent in the Princeton area, if you would like her contact information, let me know. I wish you the best of luck on your purchase.
0 votes Thank Flag Link Wed Sep 28, 2011
Sounds like you're in a good position to purchase the short sale. The HEL should save you a little on the closing costs, but as you know creates a lien on your primary home. The bank really does not care too much as to how you come up with the funds, only that you can close on the property! My personal opinion is that the HEL would be more beneficial than the mortgage due to cost differences.....be sure the seller (bank) provides a title insurance policy on the second home. Renting out the apartment is a big plus, particularly with borrowing only $100k
0 votes Thank Flag Link Tue Sep 27, 2011
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