Very detailed explanation covering all aspects of home equity. The last suggestion is the best- getting equity out to purchase another property. Meanwhile, the rent is covering the first house!
I like this a lot! I do this at one of my properties by Investing like a pro in multifamily real estate! It is life-changing and generational wealth-creating.
Really want to take a step here and tap into our equity. We bought a 100 yr old plantation era house on Big Island, rehabbed and lived in it for almost 3 years. Initial cost was 150 easily put another 50 so 200 total, I feel it could be valued about 3/340 now. Houses do tend to sell fast here so timing it would be key.
There are many details that are not mentioned here. Most lenders will only allow 80-85 percent loan to value. Also, debt to income may be too high to buy that 2nd home and the lender will need to see rent transactions to approve the next purchase
Thanks this was very helpful. We''re outgrowing our condo that we bought at the beginning of the pandemic but we got it for a good price and super low interest. The estimated value of our condo has gone up quite a bit while living here. This allows us to think about all the options for our family moving forward. Very detailed and straight to the point.
I would like to buy a building with my Equity. I bought a two family house in 2018 for $375,000 With hey don’t payment of $115,000 Now the value of the house is about 815 to 900,000 What’s the best to do?
This was by far the best video I’ve watched on home equity! We are getting ready to tap into our equity once rates come down a bit and not a single video explained what I needed it to and you did! Thank you so much, your expertise radiates through the screen!!
Use part of the equity to acquire a profitable business with assets. Make sure the business has assets you can finance to pay yourself back in 60 days or so. Find a good commercial loan BROKER. Not your bank. Then, pay yourself enough to qualify for a loan on the new house. A proactive CPA or fractional CFO should help you avoid mistakes.
Traditional loans/mortgages are driven by income. That said, $100k is a decent chunk of cash towards a down payment. When you purchase an investment property, you get to use the rental income to help you qualify for the mortgage so that could be a strategy. A second idea is taking that $100k to a Financial Advisor and having them invest it wisely so it grows over time - and you continue adding to that investment. A third option is partnering with someone you trust and buying something together. You both contribute cash and income to the deal and qualify as joint buyers. Lastly, you do nothing - sometimes it's wise NOT to force the issue.
Hey Justin , awesome video. Just have a quick question regarding this method to buy another property. Will you essentially have 3 payments to make a month? The original mortgage, the equity loan and the new mortgage? Or does the equity loan become lumped in with the new mortgage?
Hi - yes, you will have a total of 3 payments. The home equity loan is essentially another mortgage - it is not lumped into the existing mortgage. The goal is to have the rental income from the new investment property purchase cover the mortgage for that property and the equity loan. Make sense?
Using equity for the down payment is fine as long as you're comfortable with the monthly payments. If you are building a new home, that could take a year... so you just need to make sure that you are okay with that additional monthly payment.
Im 56 and have paid off my mortgage. I am still working and have very little debt. We have established a 1 year emergency fund and have cash working in the market.What is the best way to leverage our home to invest in other properties?
Hi - thanks for the question. It depends how much equity you want to tap into, but either of the optioned mentioned could work. With rates coming down, a cash-out refinance offers a lower fixed rate that could be more manageable for you - especially if you want to keep your saved cash in the market, compounding and growing. Happy to help you think this through and strategize, feel free to email me directly @ Justin@vybemortgage.com - I'm a mortgage lender and this is exactly what we do.
He just explained it in the video. Skip to where it's titled "how to use the equity". Basically, you take a new small loan of about 80% of the equity you have. Then you grab that cash and buy a rental that will be cash flowing. Just make sure you can pay the mortgage you currently have on FIRST home and the new equity (way smaller) loan. The loan from the 2nd home (the rental) will be paid mostly by the renters.
If you have multiple properties, yes - you can take equity out of one home to pay off another mortgage on a different home. However, be aware of the rates and loan terms.
@@oscarvelz5385 it depends on the down payment the the annual tax/insurance amount. Let’s say you put down 5% ($25k) and conservatively estimate taxes/insurance are an additional $700mo. Estimated payment would be around $3,800. You’d need to make $120k+ to qualify and afford this. **These are estimates**
U got be careful that ur rental has a dependable renter or you’ll get stuck with no payment money it can be risky between no rent paid n any repair cost needed any damages from the renter & any of their belonging removal they may stick u with
You can, depending upon how much equity you have and what price range you're looking at for the new property. LMK if you want help thinking it through.
2 good questions: 1. Anytime you take a new loan of any kind, there is a credit inquiry. That said, taking a new mortgage or a HELOC does not have a significant/negative impact on your credit score. 2. The new HELOC payments are included in your debt-to-income ratios and will be taken into account when you getting preapproved for the new investment property purchase.
The chances that rental income will cover the payment plus all operating costs of a home rental with a $300k principal balance plus a $50k line of credit on a $400k market value is effectively zero. If you rent out a house under this advice, you’re going to pay out of pocket for every repair and NWT maintenance item. The advice only works under very specific market conditions where rents go super high in relation to value, which is only seen in boom/bust conditions. Show me the pro forma for this model, and I guarantee the numbers won’t add up. Great New Jersey used car salesman pitch, though … you almost had me until the advice piece. 🤣 Bad numbers only work for suckers and chumps. 👎👎
Thank you for taking your time and helping others. Good video
Very detailed explanation covering all aspects of home equity. The last suggestion is the best- getting equity out to purchase another property. Meanwhile, the rent is covering the first house!
I like this a lot! I do this at one of my properties by Investing like a pro in multifamily real estate! It is life-changing and generational wealth-creating.
Really want to take a step here and tap into our equity. We bought a 100 yr old plantation era house on Big Island, rehabbed and lived in it for almost 3 years. Initial cost was 150 easily put another 50 so 200 total, I feel it could be valued about 3/340 now. Houses do tend to sell fast here so timing it would be key.
Nice! Well, if you need some help thinking it through feel free to reach out. justin@vybemortgage.com
There are many details that are not mentioned here. Most lenders will only allow 80-85 percent loan to value. Also, debt to income may be too high to buy that 2nd home and the lender will need to see rent transactions to approve the next purchase
Both good points. You cannot borrow all of your equity.
I need to hurry up and tap into my equity, been wanting more investment property real estate for quite some time
LMK if you have any questions. If you can earn more than the cost of borrowing, it's worth looking into.
Don't forget to run the numbers, and never rush into a deal b/c you wanted more of something.
I run a website that helps people buy and sell properties in any condition. You might find it useful.
EXCELENT EXPLANATION WOW thank you!
Glad it was helpful!
Very informative looking forward to using my equity for an investment property. Thanks a mill🎉
THANKYOU JUSTIN
Thanks this was very helpful. We''re outgrowing our condo that we bought at the beginning of the pandemic but we got it for a good price and super low interest. The estimated value of our condo has gone up quite a bit while living here. This allows us to think about all the options for our family moving forward. Very detailed and straight to the point.
@@DailyRants89 thanks. If you want some advice thinking it through, let me know. This is what we do. Justin@vybemortgage.com
I would like to buy a building with my Equity.
I bought a two family house in 2018 for $375,000
With hey don’t payment of $115,000
Now the value of the house is about 815 to 900,000
What’s the best to do?
@@tigerbalm8327 I can help you strategize. Let’s connect justin@vybemortgage.com
This was by far the best video I’ve watched on home equity! We are getting ready to tap into our equity once rates come down a bit and not a single video explained what I needed it to and you did! Thank you so much, your expertise radiates through the screen!!
Thanks for the note, I'm glad you found this helpful. LMK if you have any additional questions.
Beautifully articulated
Thank you
Best explanation
Thank you!
I have 900k in equity. My income is low and i qualified for 100k heloc. Hardly enough to put down on an additional home. Whats the play?
Use part of the equity to acquire a profitable business with assets. Make sure the business has assets you can finance to pay yourself back in 60 days or so. Find a good commercial loan BROKER. Not your bank. Then, pay yourself enough to qualify for a loan on the new house. A proactive CPA or fractional CFO should help you avoid mistakes.
Traditional loans/mortgages are driven by income. That said, $100k is a decent chunk of cash towards a down payment. When you purchase an investment property, you get to use the rental income to help you qualify for the mortgage so that could be a strategy.
A second idea is taking that $100k to a Financial Advisor and having them invest it wisely so it grows over time - and you continue adding to that investment.
A third option is partnering with someone you trust and buying something together. You both contribute cash and income to the deal and qualify as joint buyers.
Lastly, you do nothing - sometimes it's wise NOT to force the issue.
Hey Justin , awesome video. Just have a quick question regarding this method to buy another property. Will you essentially have 3 payments to make a month? The original mortgage, the equity loan and the new mortgage? Or does the equity loan become lumped in with the new mortgage?
Hi - yes, you will have a total of 3 payments. The home equity loan is essentially another mortgage - it is not lumped into the existing mortgage. The goal is to have the rental income from the new investment property purchase cover the mortgage for that property and the equity loan. Make sense?
Yeah second mortgage and third mortgage 😙
@@fastm3980 yeah what? If you buy a rental property correctly that is cash flowing, the rental income covers the mortgage and heloc payments.
I also have another question: Would it be wise to use a home equity loan for the down payment of a construction loan to build your dream home?
Using equity for the down payment is fine as long as you're comfortable with the monthly payments. If you are building a new home, that could take a year... so you just need to make sure that you are okay with that additional monthly payment.
@justinlopatin thank you very much for the advise.
Im 56 and have paid off my mortgage. I am still working and have very little debt. We have established a 1 year emergency fund and have cash working in the market.What is the best way to leverage our home to invest in other properties?
Hi - thanks for the question. It depends how much equity you want to tap into, but either of the optioned mentioned could work. With rates coming down, a cash-out refinance offers a lower fixed rate that could be more manageable for you - especially if you want to keep your saved cash in the market, compounding and growing. Happy to help you think this through and strategize, feel free to email me directly @ Justin@vybemortgage.com - I'm a mortgage lender and this is exactly what we do.
He just explained it in the video. Skip to where it's titled "how to use the equity". Basically, you take a new small loan of about 80% of the equity you have. Then you grab that cash and buy a rental that will be cash flowing. Just make sure you can pay the mortgage you currently have on FIRST home and the new equity (way smaller) loan. The loan from the 2nd home (the rental) will be paid mostly by the renters.
Your such a great teacher. I look forward to learning more from you. Do you offer classes.
Just homebuyer and real estate classes.
@@justinlopatin how can I apply and join the classes .
@@kibirigevandross5174 keep an eye out, we will share the registration links for homebuyer classes here and on my IG page @justinlopatin
Can I take a home equity loan to paid off my current mortgage ?
In theory. But the interest rate will be higher on the new loan. So that wouldn't make sense
If you have multiple properties, yes - you can take equity out of one home to pay off another mortgage on a different home. However, be aware of the rates and loan terms.
you the man. great video.
thank you
great advice ❤
Thank you
Appreciate the knowledge trying 2 get another house here in CALIFORNIA #venturacounty & rent it out interest rates r crazy right now
Send me an email if you need help thinking it through justin@vybemortgage.com
What is the salary I need to qualify for a 500.000 home? Please answer me that, thank you
@@oscarvelz5385 it depends on the down payment the the annual tax/insurance amount. Let’s say you put down 5% ($25k) and conservatively estimate taxes/insurance are an additional $700mo.
Estimated payment would be around $3,800. You’d need to make $120k+ to qualify and afford this. **These are estimates**
U got be careful that ur rental has a dependable renter or you’ll get stuck with no payment money it can be risky between no rent paid n any repair cost needed any damages from the renter & any of their belonging removal they may stick u with
@@Lynn67mama very true, always risk to consider.
I want to use my home equity to buy a new house for cash.
You can, depending upon how much equity you have and what price range you're looking at for the new property. LMK if you want help thinking it through.
With a home equity loan, wouldn't that affect your credit score and debt to income when making a new investment purchase?
2 good questions:
1. Anytime you take a new loan of any kind, there is a credit inquiry. That said, taking a new mortgage or a HELOC does not have a significant/negative impact on your credit score.
2. The new HELOC payments are included in your debt-to-income ratios and will be taken into account when you getting preapproved for the new investment property purchase.
@justinlopatin thank you very much for taking the time and answering the question.
@@nelsonvelazquez7723 you got it! You can message me anytime, this is what we do all day every day
Bonnie
Who?
👀
The chances that rental income will cover the payment plus all operating costs of a home rental with a $300k principal balance plus a $50k line of credit on a $400k market value is effectively zero. If you rent out a house under this advice, you’re going to pay out of pocket for every repair and NWT maintenance item. The advice only works under very specific market conditions where rents go super high in relation to value, which is only seen in boom/bust conditions. Show me the pro forma for this model, and I guarantee the numbers won’t add up. Great New Jersey used car salesman pitch, though … you almost had me until the advice piece. 🤣 Bad numbers only work for suckers and chumps. 👎👎
Of course you have to run the numbers to see if the rent would cover the mortgage and HELOC payment but it's sound advice if doable.
Hello may I olease have an email for you? I have dome questions and need help like last couple weeks lol please and thank you.