Question Details

Max, Home Buyer in New Jersey

Have you seen any buyers use a HELOC (equity line of credit) to buy a new home with cash while awaiting the

Asked by Max, New Jersey Thu Dec 20, 2007

sale of their current home? Obviously the buyer would have to have a large of amount of equity in their current home and be willing to pay the (tax deductible) interest on the HELOC until their home sells. But it would give them flexibility in their new home purchase, would it not, if they want to convert their equity into the cash purchase of a new home and be mortgage-free?

Help the community by answering this question:

Answers

4
Max, not at all!

Just please, do it with peace of mind.

Happy Holidays!

Todd Norsted
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Fri Dec 21, 2007
Thank you. No doubt the best scenario is to sell first or concurrently with purchase, but glad to hear I wouldn't be breaking new ground.
0 votes Thank Flag Link Fri Dec 21, 2007
It can be a risky move, like Todd said ...nerve racking is right because the property you are leveraging against may not sell for a while longer than expected. Unless you are getting an above average great deal on a new home and as you said, you pay it off in cash so you have no mortgage on it at all. THAT could be a nice move, but it still depends on how soon you would expect to sell the current house and can you afford the payments on the LOC and its original mortgage until its sold. Look down the road a few months and see if it would still make sense if the current house was still not sold.

Don
0 votes Thank Flag Link Thu Dec 20, 2007
Max....yes, I have seen that. In today's market it can be a bit nerve racking to do that, as with the market time and the increased payment, it can be very taxing for the Buyer doing that.

I hope that helps and wish you the best.
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Thu Dec 20, 2007
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer