Need help with Buying a second home, HELOC, 20% down payment, etc..
I need some help regarding buying a second home and coming up with 20% down payment. Any help is greatly appreciated.
I bought my current home for $262k. The mortgage I took was $250k, I've paid it down to $224k (with no extra payments). Total principle in the home is $38k (not taking into consideration the appreciation in value past 3 years)
Now.. The home I wish to upgrade to is in the $550k range. They need 12.5% down at least which is $68k. I actually have that amount saved in cash which I should have thrown down on my current mortgage but decided to invest instead since my current rate is so low. I ca take out this cash within a day's notice, it's not locked.
Issue: If I throw some of my current savings (lets say $35k) into my current mortgage, that would bring it down to $189k ($224 minus $35). This entitles me to HELOC right since I have enough value in my home?
- Can I then use the HELOC as a down payment for my future home? How does that work if you're planning on selling the first home?
- How much worth of HELOC can I get considering the example above, just whatever principle I put in?
- Is HELOC based on the value I bought the house ($262k) or the mortgage I took ($250k) or the current home value ($300k+)? Like when they say ypu have to have 20% of your home paid off, which number do they mean?
I know some of you would ask, why not just continue saving the cash and put it down.. I have my reasons, but I need to drop this cash into the mortgage and I just want to make sure I have access to it easily when it's time to make a down payment on the second home.