I have a house in Tennessee that's worth about 150K. The house is in my name only - not my spouse's name. The only lien on the house is a 120K HELOC at 2.4%. The HELOC is in my name and my spouse's name. We pulled 100K out of the HELOC about 6 months ago to prevent HELOC freezing/closure and put it in an interest-bearing account.
I currently have a contract on a foreclosed house just across the state line in Georgia. We'll close in 3 weeks. I'm buying that house for 'cash' with the 100K that we previously pulled out of our HELOC.
I'd like to immediately turn around and pull some cash out of the 2nd house via a(nother) HELOC in order to do some repairs on the 2nd house. Then I'll sell the house (hopefully) for a profit (hopefully).
I have some questions listed below, but please comment/ask/answer unasked questions if you see issues that I'm not seeing.
Question 1: Should we title the 2nd house in my name, my wife's name, or both names? Question 2: What is the best/easiest way to get cash out of the 2nd house? Will there be issues with this? Question 3: What would it take to establish the 2nd house as a primary residence 'temporarily'? We're fine with moving into the 2nd house for a few months to manage the repairs, but are there issues to consider here with the houses being in different states and the HELOC on house1? Question 4: How long should we keep the 2nd house (ideally)?
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How much are the repairs? Your cheapest money might be in the form of a purchase money mortgage on the second house. You might be running out of time with only three weeks to go, but that is probably what I would try to do.
Depends on your state's laws. You may have to put (some) of the paperwork in your spouse's name as well. I got approved for the mortgage and started the process on a second home in Florida just a few weeks ago, but when we went to closing my wife's name was listed on some docs as title said it's required in Florida.
HELOC is the cheapest way.. least closing costs, and lowest rates for sure, and of course it's tax deductible just like a mortgage.
What do you mean primary residence temporarily? Are you looking for state domicile issues? Or insurance or HELOC/Mortgage terms to be based on that?
How long is up to you.. keep it as long as you want or need to until your goals are met.
dcwilbur said:How much are the repairs? Your cheapest money might be in the form of a purchase money mortgage on the second house. You might be running out of time with only three weeks to go, but that is probably what I would try to do.
Thanks. The only reason I got the house was because of the cash offer (other bidders had mortgages, but the bank was more interested in cash).
ilikebtmoney said:Depends on your state's laws. You may have to put (some) of the paperwork in your spouse's name as well. I got approved for the mortgage and started the process on a second home in Florida just a few weeks ago, but when we went to closing my wife's name was listed on some docs as title said it's required in Florida.
HELOC is the cheapest way.. least closing costs, and lowest rates for sure, and of course it's tax deductible just like a mortgage.
What do you mean primary residence temporarily? Are you looking for state domicile issues? Or insurance or HELOC/Mortgage terms to be based on that?
How long is up to you.. keep it as long as you want or need to until your goals are met.
Thanks. I'll look into the state laws. I was thinking if we put it in my wife's name we might save on taxes somehow, since technically it would be her only house.
Yes, for the primary residence question I was thinking about the HELOC terms.
dcwilbur said:How much are the repairs? Your cheapest money might be in the form of a purchase money mortgage on the second house. You might be running out of time with only three weeks to go, but that is probably what I would try to do. If this is a short term flip, the cheapest way to do it will be tapping an equity line on a primary residence. No other vehicle will provide financing as cheap, with as few hassles, and with tax advantages. Since he already has the money, he does not need to worry about involving a loan officer, who will need to get paid for the transaction.
Taking a PMM on the second house only makes sense if he wants to get a fixed interest rate on that house, in the event that he cannot sell it and maintain it as a rental.
If his concern is liquidity, then he should take a HELOC on the second after closing.
ilikebtmoney said:You don't file your taxes joint?
Yes, we do. I'm just wondering if there is any potential tax benefit that I'm not considering - capital gains, etc. I don't know of any which is why I'm just throwing it out there for ideas.
SASMel said:ilikebtmoney said:You don't file your taxes joint?
Yes, we do. I'm just wondering if there is any potential tax benefit that I'm not considering - capital gains, etc. I don't know of any which is why I'm just throwing it out there for ideas.
If you file jointly, there's no difference between what's for you or your spouse as far as tax benefits.
If his concern is liquidity, then he should take a HELOC on the second after closing.
Is this easy to do if I already have another HELOC on another house?
In 2007, I tried to get a HELOC on a rental and could not get it. I have the house free and clear and I found only 1 lender - the offer was a HELOC at 11% [Eleven percent].
My rental was in Las Vegas, that could be one reason. Value was once $300+k, now $150k, I was asking for a $100k HELOC. Could not get it. Debt to income was not the reason.
If his concern is liquidity, then he should take a HELOC on the second after closing.
Is this easy to do if I already have another HELOC on another house?
In 2007, I tried to get a HELOC on a rental and could not get it. I have the house free and clear and I found only 1 lender - the offer was a HELOC at 11% [Eleven percent].
My rental was in Las Vegas, that could be one reason. Value was once $300+k, now $150k, I was asking for a $100k HELOC. Could not get it. Debt to income was not the reason.
-Peter
PENFED is the only lender I've found that is willing to do a HELOC on a non-owner occupied property. Any other options to consider?
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