Financing in Sinton>Question Details

Jayme, Home Buyer in Texas

Help with a mortgage.

Asked by Jayme, Texas Mon Apr 14, 2008

We have no money down, but currently owe a home, but would like to keep it for rental property. Can a mortgage be done using the other house for collectoral instead of having a down payment?

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Yes.

Check with an accountant or financial planner to make sure that that's the right approach for you. What you're describing may not be the best option.

If you decide to go ahead, then check with a good mortgage broker.

It is possible to have a mortgage secured by another piece of property, though I don't personally know any brokers who offer that. Another possibility is to set up a HELOC on the property with equity, then use the funds from the HELOC to help purchase the second property. Or you could always look for a second property that wouldn't require any down payment. That wouldn't occur through traditional lenders, but you could buy a property "subject to" the existing mortgage, if you found the right property. Note: A subject-to acquisition will violate a lender's due-on-sale clause, but it is frequently done, especially in today's market. Or you could find a second property and either lease-purchase or lease-option it. And the list goes on. But, yes, there are lots of ways.

Just make sure you know what you're doing financially before moving forward.
1 vote Thank Flag Link Mon Apr 14, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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Potentiall yes, but your loan officer will want more details. If you own the home outright, then potentially you could take a home equity line of credit and use that for your down payment and closing costs on the new home. It will just depend on your credit, income, debt, if you own the property outright or if you have a loan on it and how much you owe, vs what the house is worth.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Mon Apr 14, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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If you have a lender that you like to work with, they would be the best person to ask these types of questions. There are several programs and loans that would enable you to do what you are asking, but again I am not a professional in that area and don't wish to give you incorrect advise. There are a lot of variables when it comes to qualifying for loans and a mortgage professional would definitely be your best bet. Hopefully a mortgage professional will answer your question!! Wish I could have been more help! Have a great day!
0 votes Thank Flag Link Mon Apr 14, 2008
There are more questions that need to be addressed

I am a Dallas Real Estate Agent and loan officer few fyi's

a) Never purchase a home w/o a realtor involved even if that is from a builder or a for sale by owner
b) Have you taken inconsideration all the factors when you own rental property? I also own rental property if you don't know real estate difficult to work with all the problems and etc.
c) Mortgages are driven by the following;
1) Credit scores
2) Debit ratio
3) Locate a season loan officer that can review your short term and long term goals.

No you can't use a single family home you currently own for a down payment considering you don't own the home out right therefore you still have pending mortgage.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Apr 14, 2008
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