Cookie On My Mind asked:
With the home I’m purchasing (it’s bank owned, so I”m getting it at a great price), I’ll have $32,000 instant equity. When could I take out a small loan to make updates to the home? Right away?
Curtis
With the home I’m purchasing (it’s bank owned, so I”m getting it at a great price), I’ll have $32,000 instant equity. When could I take out a small loan to make updates to the home? Right away?
Curtis
Catherine
This will depend on what lender you use. Some lenders will not advance you more than the appreciated value until you have been in the home for a year others will base the valuation on a new appraisal. Do some shopping.
Comment by mazziatplay — September 27, 2009 @ 1:01 am
Ted
Don’t be so certain that you have $32K instant equity until you undergo an appraisal for a HELOC. Given the current real estate market, you might be surprised.
If you DO have equity, you may immediately apply for a HELOC.
Comment by acermill — September 27, 2009 @ 9:44 pm
Gertrude
How are you purchasing the property? If it is mortgaged on completion then it all depends on the terms of your mortgage. If you are looking at remortgaging (releasing equity) then you may find its advisable to get a no tie in mortgage. I.e one that allows you to pay of the full amount at any time, but these products usually come with no fixed mortgage rate…
take this route if you wish to remortgage straight away, buy it on a variable rate with no early repayment penalties or tie ins, then remortgage, release some equity (bear in mind the mortgage lender will not release it all and the less of the property you actually own the higher your rate is likely to be) and sign up for a fixed rate mortgage so you can predict your repayments over however long the term is on the fixed rate term of your mortgage…
Some mortgages offer a draw down facility which means you have a pre-agreed figure available to you at any time (often a phone call away) because the lender is awaree of the equity that exists in the property (they are lending a low loan to value) so it is much quicker than going through the legalities of remortgaging.
If you do not sign up for a mortgage with this facility, it is likely to take a few weeks for you to get the money from making the application to the valuer coming out to the property, the lender agreeeing, then paying you the money and upping your monthly repayments.
Bear in mind I am british so i appreciate you may not be au fait with some of the terminologies however I believe the concepts are the same.
See an INDEPENDANT BROKER for your mortgage advice unless your bank offers you an exceptionally good deal on the finance.
Comment by Pete C — September 28, 2009 @ 5:18 pm
Lori
You do understand that “using the equity” means you are taking out a loan that has to be paid back? I would be careful of getting yourself upside down on the house by taking out loans so soon and in an unstable real estate market.
Comment by Seano — September 29, 2009 @ 2:08 am
Allan
Some lenders will only lend 75% of value, so you may have to shop around. You can get a HELOC right away, but I’d be cautious of how these two new big loans will effect your credit score being so close and your debt to income ratio.
Maybe mazziatplay or one of the other mortgage lenders can weigh in on this factor.
Comment by godged — October 1, 2009 @ 1:00 am