2nd home purchase

[GUCHI]

MB
just wanted to see if i could gather some advice in purchasing a 2nd home regarding using home equity vs. a standard rental loan and taxes to consider and any other info. that may be helpful.

thanks :)
john+

[pmcint01]

Don't use equity because if you can't make the payments work on the 2nd house you don't want to lose both in foreclosure.

Just my opinion

[GUCHI]

pmcinto

i see what your saying, but i did not mention that 1st home is paid for and this will be my second home as investment property. does that change your opinion or do you still say no?

[pmcint01]

Oh Well, that does change things if you have no mortgage on your primary home. You might be able to get a better rate on a home equity line than a mortgage for a 2nd home. I would just make sure that you'd be able to cover the equity loan payments for 6 months assuming it is vacant that long. See if you can compare the rates. I do know that real estate investors do buy additional investment properties with cash deals using equity lines.

[Silverbird]

Hrmm. An investment? The problem is, no one seems to know what the 'recovery' in housing prices is going to look like, or when it is going to occur. It is very hard to sell for a profit - and if home loans continue to be hard to get (will even get harder if the Govt is able to get rid of Fannie and Freddie) prices may continue to stay flat.

Caveat - the bird is very risk averse.

[RealMoneyIssues]

Note: I have seen a lot of news reports that many people are ditching their homes (by choice or not) and going into rentals, so the rental market has been pretty strong.

Just a thought.

[Steadygain]

Hrmm. An investment? The problem is, no one seems to know what the 'recovery' in housing prices is going to look like, or when it is going to occur. It is very hard to sell for a profit - and if home loans continue to be hard to get (will even get harder if the Govt is able to get rid of Fannie and Freddie) prices may continue to stay flat.

Caveat - the bird is very risk averse.

You SHINE through once again!!!

Plus -- Rental Properties can become a huge hassel and often become more problems than the dream they were initally foreseen to be.

LOCATION is Everything!!!

If you've got a 'Goldmine' for a bargain that you're confident is structurally solid and a little fixer up will double the price then go for it.

For those who can afford it -- this is most certainly the most ideal time to take advantage of today's housing Market.

Bottomline - soak in Silverbird's words - take them to heart and go from there.

GL

[jpcavin]

If you're looking for rates, my curret HELO with B of A is 3.25%. Don't know how it compares to other lenders but it's good enough for me.:)

[GUCHI]

as far as rental prop, i don't know if i want to sell as long as i have a good tenant and pay down the mortgage, eventually it will be retirement income once the house is paid for. 1st house is on a 15 yr mortgage with 12 yrs left on it. this 2nd rental home i'm considering, we already have a tenant. my wifes BFF. ( i know dangerous dealing with a freind and bizzness). but she is in need and we can help each other in our own little way. i will probably go 30 yrs on this one with no prepay penalties. all right folks i'm ready give it to me, all input will be appreciated.
thanks MB

[GUCHI]

jpcavin
refresh my memory again on what HELO is?

[jpcavin]

Sorry, meant HELOC - Home Equity Line of Credit. Minimal cost. Low interest.
Variable rate, interest only payment for specific period of time. Then converts to fixed rate. You can always increase the payments to whatever you can afford.
There's pros and con's. I personally have the money to cover the loan if interest rates were to hike up. In the mean time, taking advantage of the low interest rate.
But I am no genius compared to the others on this board. I would seek their advice. I have much more to learn.

[GUCHI]

jp
thanks for the advice. i like knowing my rate i'm looking at @ 4.25% fixed for 30yrs.

MB
u heard jp, and all comments are welcome.
thanks

[jpcavin]

Like I said, pros and cons. I got a $135K HELOC to purchase a second home (rental income) back in 2004. Not sure how much the interest rate was at the time but it was pretty low. Term was for 10 years. In 2014, it will convert to a fixed rate at whatever the going rate is. Currently owe $35K and interest is still holding at 3.25%. I plan on having it paid off 2014 or earlier. House rents for $1475 (Austin, TX). The rental income pays for the loan and then some. In a few years, it will all be income. :D

[jpcavin]

I agree with you. I don't think I'd have the stomach to get into a variable rate at this time. I think this country is headed for inflation in the near future. The debt bubble has to bust at some point.

[GUCHI]

jp
i am looking out of necessity( living space for my son in school and close to beach).

[GUCHI]

i spoke to a realtor today and he told me that the housing market has not hit bottiom yet. he and other realtors indicate that houses will continue to decrease in sales price in the next 6-12 mths but interest rates will increase slightly. also he said that the banks have a whole $hitload of foreclosures on the books, but are letting them out 1 and 2 at the time so not to collapse the housing market. he is advising me to wait to buy a houase until next yr if i'm not in a hurry.

[Frixxxx]

i spoke to a realtor today and he told me that the housing market has not hit bottiom yet. he and other realtors indicate that houses will continue to decrease in sales price in the next 6-12 mths but interest rates will increase slightly. also he said that the banks have a whole $hitload of foreclosures on the books, but are letting them out 1 and 2 at the time so not to collapse the housing market. he is advising me to wait to buy a houase until next yr if i'm not in a hurry.
Wow, A realtor, who makes money on selling and buying houses tells you NOT to buy?

Wait a second, I have to process this one.

[RealMoneyIssues]

Wow, A realtor, who makes money on selling and buying houses tells you NOT to buy?

Wait a second, I have to process this one.

Might be a friend or knows he isn't desperate to buy...

[Frixxxx]

jp
i am looking out of necessity( living space for my son in school and close to beach).


Might be a friend or knows he isn't desperate to buy...
I thought of that but GUCHI said the above...:blink:

[RealMoneyIssues]

I thought of that but GUCHI said the above...:blink:

oops, missed that... :rolleyes:

[GUCHI]

i thought that something might be funny! my initial thought was he did not want 2 f--k with me since i was looking at $100000 range and i mentioned that we could live with a home that needs some minor repair. the realtor came from a rec. from a freind. i looked on line on his site intracoastal realty and found several homes under $100000 which was very promising since he said most homes would fall in the 135s. i appreciate your comments and considerations.

[GUCHI]

i have had several offers that i have made 4-5 with no luck so far. i'm mainly looking at foreclose and short sales(lots of competition here). we have an offer just made this past sunday on a short sale. the last short the lienholder (bank) counterered our offer and added $3000 to the asking price and wanted me to pay delinquent hoa $1400, the nerve of them. i told them they could hold it! :)prices are good and i hear there are more homes coming. rates are good and expected to get better. anyone else have any experiences?

thanks
john

[LTInvestor]

After a number of years where short sales haven't worked, I think it's time to start gearing up for a few foreclosures and short sales in the next 12-24 months. Home flippers are having a tough time selling in this market, and rentals are starting to cool off a bit. It'll be a great time to be a cash buyer next year. As an alternative, local credit unions seem to be offering lower rates than most banks as well.

[Bullitt]

It was a great time to be a cash buyer the past two years even though rates were some of the lowest in history. Unless you had 100% cash or a very large down payment, you weren't getting the house.

Hurricane ravaged parts of Florida might be a good place to buy a second home. Many properties will be lost because owners won't be able to afford repairs or re-build according to updated building codes. Good luck beating out the professionals that are down there right now making moves though. Besides, the properties that are bargains will be bargains for a reason. A "long term investment" for sure.

[LTInvestor]

Agreed on FL, it still has good population growth and a good long term outlook. Cash buyers will be even better positioned going forward - sellers will want more certainty of closing in a recession, or when mortgage rates are 7%+.