This was by far the best video I’ve watched on home equity! We are getting ready to tap into our equity once rates come down a bit and not a single video explained what I needed it to and you did! Thank you so much, your expertise radiates through the screen!!
I'm in Michigan, and the housing market here over the past 7-8 years has been unprecedented. Houses that were purchased for $130K in 2015 are now going for $590K. These are tiny, poorly constructed 950-square-foot homes in quiet, mediocre neighborhoods. Meanwhile, nicer, average-sized homes in better neighborhoods that were over $300K a decade ago are now selling for $750K+. It's wild.
I know, it's like that across much of the Midwest - especially in the big cities. Construction has been lagging demand since the 2008 housing crisis and there's still a huge lag in supply unfortunately. Good for current homeowners, not good for those wanting to purchase.
Use part of the equity to acquire a profitable business with assets. Make sure the business has assets you can finance to pay yourself back in 60 days or so. Find a good commercial loan BROKER. Not your bank. Then, pay yourself enough to qualify for a loan on the new house. A proactive CPA or fractional CFO should help you avoid mistakes.
Traditional loans/mortgages are driven by income. That said, $100k is a decent chunk of cash towards a down payment. When you purchase an investment property, you get to use the rental income to help you qualify for the mortgage so that could be a strategy. A second idea is taking that $100k to a Financial Advisor and having them invest it wisely so it grows over time - and you continue adding to that investment. A third option is partnering with someone you trust and buying something together. You both contribute cash and income to the deal and qualify as joint buyers. Lastly, you do nothing - sometimes it's wise NOT to force the issue.
You can, depending upon how much equity you have and what price range you're looking at for the new property. LMK if you want help thinking it through.
Hey Justin , awesome video. Just have a quick question regarding this method to buy another property. Will you essentially have 3 payments to make a month? The original mortgage, the equity loan and the new mortgage? Or does the equity loan become lumped in with the new mortgage?
Hi - yes, you will have a total of 3 payments. The home equity loan is essentially another mortgage - it is not lumped into the existing mortgage. The goal is to have the rental income from the new investment property purchase cover the mortgage for that property and the equity loan. Make sense?
If you have multiple properties, yes - you can take equity out of one home to pay off another mortgage on a different home. However, be aware of the rates and loan terms.
This was by far the best video I’ve watched on home equity! We are getting ready to tap into our equity once rates come down a bit and not a single video explained what I needed it to and you did! Thank you so much, your expertise radiates through the screen!!
Thanks for the note, I'm glad you found this helpful. LMK if you have any additional questions.
I need to hurry up and tap into my equity, been wanting more investment property real estate for quite some time
LMK if you have any questions. If you can earn more than the cost of borrowing, it's worth looking into.
Don't forget to run the numbers, and never rush into a deal b/c you wanted more of something.
I run a website that helps people buy and sell properties in any condition. You might find it useful.
Beautifully articulated
Thank you
I also have another question: Would it be wise to use a home equity loan for the down payment of a construction loan to build your dream home?
I'm in Michigan, and the housing market here over the past 7-8 years has been unprecedented. Houses that were purchased for $130K in 2015 are now going for $590K. These are tiny, poorly constructed 950-square-foot homes in quiet, mediocre neighborhoods. Meanwhile, nicer, average-sized homes in better neighborhoods that were over $300K a decade ago are now selling for $750K+. It's wild.
I know, it's like that across much of the Midwest - especially in the big cities. Construction has been lagging demand since the 2008 housing crisis and there's still a huge lag in supply unfortunately. Good for current homeowners, not good for those wanting to purchase.
Sounds like you should have bought more mediocre homes lol.
I have 900k in equity. My income is low and i qualified for 100k heloc. Hardly enough to put down on an additional home. Whats the play?
Use part of the equity to acquire a profitable business with assets. Make sure the business has assets you can finance to pay yourself back in 60 days or so. Find a good commercial loan BROKER. Not your bank. Then, pay yourself enough to qualify for a loan on the new house. A proactive CPA or fractional CFO should help you avoid mistakes.
Traditional loans/mortgages are driven by income. That said, $100k is a decent chunk of cash towards a down payment. When you purchase an investment property, you get to use the rental income to help you qualify for the mortgage so that could be a strategy.
A second idea is taking that $100k to a Financial Advisor and having them invest it wisely so it grows over time - and you continue adding to that investment.
A third option is partnering with someone you trust and buying something together. You both contribute cash and income to the deal and qualify as joint buyers.
Lastly, you do nothing - sometimes it's wise NOT to force the issue.
you the man. great video.
thank you
I want to use my home equity to buy a new house for cash.
You can, depending upon how much equity you have and what price range you're looking at for the new property. LMK if you want help thinking it through.
Hey Justin , awesome video. Just have a quick question regarding this method to buy another property. Will you essentially have 3 payments to make a month? The original mortgage, the equity loan and the new mortgage? Or does the equity loan become lumped in with the new mortgage?
Hi - yes, you will have a total of 3 payments. The home equity loan is essentially another mortgage - it is not lumped into the existing mortgage. The goal is to have the rental income from the new investment property purchase cover the mortgage for that property and the equity loan. Make sense?
great advice ❤
Thank you
With a home equity loan, wouldn't that affect your credit score and debt to income when making a new investment purchase?
Can I take a home equity loan to paid off my current mortgage ?
In theory. But the interest rate will be higher on the new loan. So that wouldn't make sense
If you have multiple properties, yes - you can take equity out of one home to pay off another mortgage on a different home. However, be aware of the rates and loan terms.
👀
Bonnie
Who?