I would think they look at your outstanding loans and payments etc. when figuring out what you qualify for. I wouldn't expect to be able to qualify for more by having both a HELOC on the on the current home and a mortgage on the new home. But by doing it that way you could end up with a smaller mortgage on the new home than you would have had if you hadn't also had the HELOC.I have often wondered: if a retired homeowner uses funds from HELOC on current home to pay for part of a new home (with plan to sell current home after finalizing purchase of new house), do banks/mortgage companies count that against you when applying for a mortgage for the remaining purchase balance? Example: Own a home that can eventually sell for $400,000. Use $250,000 of HELOC funds to buy a new house, with purchase cost of $400,000, need a mortgage of $150,000 to cover the rest. Plan to pay off the HELOC and mortgage when eventually selling the current house. Are banks OK with that HELOC money being used, or do they look at you as actually having $250,000 less than you otherwise can show in assets?
(i.e. if you need $500K and you have a HELOC for $250K and a Mortgage for $250K, once the old home sells you pay off the HELOC and just have the mortgage for $250K instead of a mortgage for $500K without the HELOC)
I don't think there is a way to game the system to actually end up with a bigger loan, but maybe there is?
Statistics: Posted by NancyABQ — Sun Aug 04, 2024 4:04 pm — Replies 10 — Views 552