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I am looking to purchase a new home, and rent out the one I currently live in (it is paid off). Would my best bet be to get a HELOC on my current home, or get a new loan?

by michele320 from Pierce, Texas. Jan 6th 2016 Reply


Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

Good quesiton Michele. Really depends on your intent and personal decision making process. HELOC will likely have low fees to set up but an adjustable rate giving you flexibility in monthly payment but considerable risk as rates rise. Plus, it may be difficult to get a HELOC if you intend to rent the current home - few banks or credit union's offer them for a rental property. If you have the downpayment for a new home, a new loan may be your better option. I would love to help when you are ready: pdumouchel@primelending.com 843-619-6025

Jan 6th 2016
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Larry Gray (lgray_312_247)
#5 ranked lender in California - 1,127 contributions

Your scenario is one best answered by getting a full mortgage loan review froma competent mortgage planner. That could be a local broker or banker who can put together the best possible loan possibilities for you to choose from. We all have had borrowers who bought another primary home while deciding to keep their current home, and attempted to give them the most complete knowledge possible so they can make educated choices.

Jan 6th 2016
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Christina Hayes (CreditRepairExpert)
#8 ranked lender in Tennessee - 68 contributions

Phil & Larry have given you great answers. One thing to remember is that you will have to qualify with both mortgages (old & new) since you are currently residing in your home and haven't actually rented it out. Even if you have a rental agreement to begin on XX day, you will have to provide the new lender tax records showing where you have rented it out for a minimum of 12 months to not have your DTI hit by the old mortgage. It is frustrating trying to retain one property and purchasing another prior to sale and or lease of the first. As the others mentioned you will need to sit down with a qualified lender to go over everything with you. Best of Luck.

Jan 7th 2016
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Larry Gray (lgray_312_247)
#5 ranked lender in California - 1,127 contributions

I recommended in my response for you to consult with a Texas licensed mortgage broker/banker to qualify you in obtaining the best possible loan scenarios for you to choose from. I wanted to encourage you in that one scenario might very well include allowing for rent of your current property in your debt to income ratio (we still provide loans that allow for this.) I am certain there are some competent Texas licensed mortgage consultants (broker/bankers) that can be very helpful to you in analyzing your particular situation.

Jan 7th 2016
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Joan Gallardo (apply@clearlending.com)
#198 ranked lender in Texas - 23 contributions

I think rates for primary residency mortgages are better than HELOC rates.

Jan 10th 2016
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