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-   -   Financing a second house before paying off your first one (http://www.diychatroom.com/f2/financing-second-house-before-paying-off-your-first-one-170182/)

tibberous 01-26-2013 02:45 PM

Financing a second house before paying off your first one
 
I have a house with very little equity, currently mortgaged. I want to buy a second house with around $50,000 down ($200,000 house)

Does this sound at all possible? It seems like it would make sense to the bank - either I pay them and they make a killing in interest or I don't and they get my $50,000.

Are their individuals who would take a loan like this? I know sometimes sellers will owner finance or do land contracts, but does anyone know what my chances of having a 3rd party do this would be?

Daniel Holzman 01-26-2013 04:52 PM

I am a bit confused as to your question. You apparently already own a house with a mortgage. I guess you have $50,000 cash available that you want to use to put a down payment on a second house. You seem to not know if the bank will issue a second mortgage.

The easiest way to find out is to ask the bank. This will not cost you anything. There are few homeowners who are going to be in a position to finance $150,000 to you, so one way or another you will need a bank involved in all likelihood. The bank will make their decision based on your credit rating, income, and the bank's evaluation of the value of the house. This is no different than any other mortgage, except that since it is a second home, you may need higher credit rating etc. to qualify than you would for a primary residence.

LVDIY 01-26-2013 05:43 PM

There are two sides to this. The first is whether or not you would qualify for a mortgage. This is the easy part, a bank should be able to tell you pretty quick if that is realistic or not.

The second and perhaps more difficult aspect is to determine how much credit risk you are willing to take on.

Also, the bank doesn't automatically get your $50.000 if you default on the loan, they get whatever the house sells for at auction less whatever costs they've had. Foreclosures often sells for less, so the bank might be lucky if the whole thing is a wash. So it's not like $50.000 down is such a safe bet that they will give anyone a mortgage.

Again, only the bank can tell you what you qualify for, but just because the bank qualify you, doesn't mean it's a smart investment.

What is your plan for this second house, are you flipping it, renting it, or is it a second home?

Bondo 01-26-2013 06:03 PM

Ayuh,.... 'n Owner carried contracts are usually a short term note, with a balloon payment at the end,....

Many times used to allow someone to build enough equity to talk to a bank, 'bout a real, longer term mortgage...

Usually the Owner don't wanta be a Banker any longer than necessary,...

md2lgyk 01-26-2013 06:56 PM

Why do you want to do this?

tibberous 01-26-2013 08:37 PM

Quote:

Originally Posted by LVDIY (Post 1102669)
The second and perhaps more difficult aspect is to determine how much credit risk you are willing to take on.

Any amount.

Quote:

Originally Posted by LVDIY (Post 1102669)
What is your plan for this second house, are you flipping it, renting it, or is it a second home?

I want a house in California to impress people. My current house is messy and has mice and all the walls are torn out, plus it's so full of **** I could go on Hoarders. I want a house that I can keep nice and just use for partying / vacationing.

Don't get me wrong, I love my house and rooms full of tools - I don't care it's messy and love that I never have to clean / drywall, BUT it isn't the type of place you can really invite girls too.

joecaption 01-26-2013 08:45 PM

Unless your making a ton of money and have a no change of loosing your job for the next 20 years your plan makes no since.
Fix up the one you have and sell of rent it out then buy the other house.

LVDIY 01-26-2013 08:54 PM

Quote:

Originally Posted by tibberous (Post 1102774)
Any amount.



I want a house in California to impress people. My current house is messy and has mice and all the walls are torn out, plus it's so full of **** I could go on Hoarders. I want a house that I can keep nice and just use for partying / vacationing.

Don't get me wrong, I love my house and rooms full of tools - I don't care it's messy and love that I never have to clean / drywall, BUT it isn't the type of place you can really invite girls too.

You are willing to take up any amount of debt as long as the bank approves you?

If you are looking to impress people who gets impressed by people's houses, then is a $200k house in California really gonna do the trick?

This is not a financial forum, but if you are asking for financial advice then I'd say this sounds like a pretty dumb idea. The idea of taking on a second mortgage simply to impress people sounds ridiculous.

If you need a place for vacations and partying, just rent something you can afford instead.

tibberous 01-26-2013 09:09 PM

Quote:

Originally Posted by LVDIY (Post 1102788)
If you are looking to impress people who gets impressed by people's houses, then is a $200k house in California really gonna do the trick?

Yeah, there actually about the same as houses around me - price wise:

http://www.realtor.com/realestateand...2_M12584-16387

Not trying to impress millionaires, just young girls.

So long as the second house costs less than $2,000 a month, I'm good. Might not be a great investment compared to stocks or something, but it's better than a fancy car, and the money you put in a house generally holds against inflation.

paintdrying 01-26-2013 09:16 PM

Heck, may as well enjoy yourself. Why be bothered with cleaning and what not. You are free man. If you want to impress people you would be better off just being less than truthful. I had a Cuban girlfriend at one point that thought i was rich because i had a Mercedes that I paid 300 dollars for. Just depends the type of people that you want to impress. I heard at one of those re-estate seminars i went to that you should never put more than 20 % down on a house.

LVDIY 01-26-2013 09:33 PM

Quote:

Originally Posted by tibberous (Post 1102803)
Yeah, there actually about the same as houses around me - price wise:

http://www.realtor.com/realestateand...2_M12584-16387

Not trying to impress millionaires, just young girls.

So long as the second house costs less than $2,000 a month, I'm good. Might not be a great investment compared to stocks or something, but it's better than a fancy car, and the money you put in a house generally holds against inflation.

Again, I would worry more about credit risk than impressing young girls, but you can of course do whatever you want.

Good luck!

md2lgyk 01-27-2013 09:42 AM

How old are you? You have the financial sense of a sixth grader.

DannyT 01-27-2013 10:53 AM

if you want to impress someone clean up the pig sty you are living in. what makes you think another house wouldn't turn into the same as the one you have now?

beenthere 01-27-2013 11:42 AM

Quote:

Originally Posted by DannyT (Post 1103098)
if you want to impress someone clean up the pig sty you are living in. what makes you think another house wouldn't turn into the same as the one you have now?

Cause he'll have 8 acres to store his stuff on before having to use the house.

paintdrying 01-27-2013 07:32 PM

Cut the guy some slack. They call it something like indulging the delusion. It is best not to directly confront a mentally ill person. This guy does not own a house nor want to buy one. He is nuts, just have some fun with him


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