Comments on: Interesting Way to Buy a House http://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html A Personal Finance Blog for Regular Folks Mon, 22 Mar 2010 12:20:09 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Free From Brokehttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-231 Free From Broke Tue, 18 Mar 2008 17:58:00 +0000 http://freefrombroke.com/?p=108#comment-231 @ LocoMono - Great advice! This is one of the reasons we haven't bought a house yet - all of the additional costs that creep up. <br/><br/>If we went through buying a house this way we'll definitely take your advice and consult a real estate lawyer. Thanks! @ LocoMono – Great advice! This is one of the reasons we haven’t bought a house yet – all of the additional costs that creep up.

If we went through buying a house this way we’ll definitely take your advice and consult a real estate lawyer. Thanks!

]]> By: TheLocoMonohttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-221 TheLocoMono Sat, 15 Mar 2008 01:32:00 +0000 http://freefrombroke.com/?p=108#comment-221 Have you factored in the cost of property taxes, maintenance fees, and insurance?<br/><br/>These are the areas people don't think about when it comes to having two properties. <br/><br/>You also need umbrella insurance for your "rental" to protect yourself from any liability issues with your tenants.<br/><br/>I would suggest talking to a real estate attorney what your legal options are in this matter.<br/><br/>It can help in the mid term but not necessarily a short term solution. Have you factored in the cost of property taxes, maintenance fees, and insurance?

These are the areas people don’t think about when it comes to having two properties.

You also need umbrella insurance for your “rental” to protect yourself from any liability issues with your tenants.

I would suggest talking to a real estate attorney what your legal options are in this matter.

It can help in the mid term but not necessarily a short term solution.

]]> By: Free From Brokehttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-215 Free From Broke Tue, 11 Mar 2008 16:25:00 +0000 http://freefrombroke.com/?p=108#comment-215 @ Kim - Sounds like a great way to buy a home. <br/><br/>@ Arohan - We have no mortgage on our current home so we could use it's total equity to borrow. Still, the renting part can be tricky for us as our development has rules for who can rent.<br/><br/>@ Nick - I hear the speculation part. Prices can just as easily go down more in two years time.<br/><br/>In all this was an idea that our accountant told us. Not sure if we'll do it. We have a LOT to figure out besides just buying a home. Still, it's something for us to consider. @ Kim – Sounds like a great way to buy a home.

@ Arohan – We have no mortgage on our current home so we could use it’s total equity to borrow. Still, the renting part can be tricky for us as our development has rules for who can rent.

@ Nick – I hear the speculation part. Prices can just as easily go down more in two years time.

In all this was an idea that our accountant told us. Not sure if we’ll do it. We have a LOT to figure out besides just buying a home. Still, it’s something for us to consider.

]]> By: midomsshhttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-212 midomssh Fri, 07 Mar 2008 07:55:00 +0000 http://freefrombroke.com/?p=108#comment-212 Thanks for the info Thanks for the info

]]> By: Nickhttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-211 Nick Fri, 07 Mar 2008 01:55:00 +0000 http://freefrombroke.com/?p=108#comment-211 Be careful when levering up. Would a vacancy adjusted rent cover the mortgage on your co-op? If not move on. No need to lever up for negative cash flow. Hoping to sell at a higher price is speculation (vs. investing)<br/><br/>Nick<br/><a HREF="investingmatters.blogspot.com" REL="nofollow">_________ matters.</a> Be careful when levering up. Would a vacancy adjusted rent cover the mortgage on your co-op? If not move on. No need to lever up for negative cash flow. Hoping to sell at a higher price is speculation (vs. investing)

Nick
_________ matters.

]]> By: Arohanhttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-210 Arohan Thu, 06 Mar 2008 22:53:00 +0000 http://freefrombroke.com/?p=108#comment-210 Could be a good way to buy the house if two things hold true:<br/><br/>1. With your home equity and the existing and new mortgage you still fall below the debt to income ratio threshold for any bank to provide you the new mortgage. This can be difficult for most people if they bought the max house first time around and have not yet built up enough equity. If you qualify, kudos to you<br/><br/>2. The housing market cooperates and you are able to find a good renter (arguably, the income from rent should improve your debt/income ratio above)<br/><br/>Interestingly, if you have sufficient equity in the first house, this can be a way of leveraging that equity and buy in some rental income generating properties! Would be nice to be able to do this in depressed market such as this and then sell out at the top<br/><br/>I will think about this Could be a good way to buy the house if two things hold true:

1. With your home equity and the existing and new mortgage you still fall below the debt to income ratio threshold for any bank to provide you the new mortgage. This can be difficult for most people if they bought the max house first time around and have not yet built up enough equity. If you qualify, kudos to you

2. The housing market cooperates and you are able to find a good renter (arguably, the income from rent should improve your debt/income ratio above)

Interestingly, if you have sufficient equity in the first house, this can be a way of leveraging that equity and buy in some rental income generating properties! Would be nice to be able to do this in depressed market such as this and then sell out at the top

I will think about this

]]> By: Kimhttp://freefrombroke.com/2008/03/interesting-way-to-buy-a-house.html/comment-page-1#comment-209 Kim Thu, 06 Mar 2008 21:43:00 +0000 http://freefrombroke.com/?p=108#comment-209 My bank used to offer home equity line of credit loans with no fees. <br/><br/>To buy this house my Dad did a HE on his house, gave me cash to buy this house and I did a HE on this house (it was bought at 60% of the tax value at an estate sale) to pay Dad back. I didn't have closing costs which saved 3K and we were able to complete the cycle in 4 weeks. I also had a very low interest rate (4%) because of the bank special :) My bank used to offer home equity line of credit loans with no fees.

To buy this house my Dad did a HE on his house, gave me cash to buy this house and I did a HE on this house (it was bought at 60% of the tax value at an estate sale) to pay Dad back. I didn’t have closing costs which saved 3K and we were able to complete the cycle in 4 weeks. I also had a very low interest rate (4%) because of the bank special :)

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