2nd mortgage

[james357]

I'm thinking about getting a second mortgage so I can have cash on hand to buy a house outside of the Atlanta area. I have a house that has 220000 fair market value and that went up almost 17,000 last year and now they're saying that the value has increased 15% this year. This is just what people are saying on my email side that Paulding County homes are going up to 15%. What I'm thinking of doing is getting a second mortgage and sitting on the cash and waiting for the houses bubble to pop in the next year. If it doesn't happen I'll pay my second mortgage off or in the meantime if I find the house I'll be able to pull the trigger. I see homes going up for sale and 3 days later I see a pending on the home. Does anyone have any advice about my strategy. Ideally I would like to see the house market bubble Pop and homes drop 30%. But Everything's Relative and if the house is dropped 30% my home will drop 30%.

 

[elduque1969]

Just get a HELOC. You don't have to take the money out. Just use it like a checking account. That way you wont be paying the interest. If you see something you want then buy it. Not sure how much you would qualify for unless your primary is close to zero. I think its going to be tough to see much of a return unless you are dialed into the market and have contacts to find cash deals. Also, many of us have lived thru a 30% drop in RE. Its not fun. If RE tanks 30% its going to mean inflation is roaring and fear in the economy will be intense. At that point are you willing to stick your neck out and put your residence on the line when things may go from bad to worse? Better strategy: Use the line and buy Bitcoin or a Growth ETF!

 

[Jeddak]

Why not refinance, lower your interest rate and pull some equity out?

 

[james357]

I paid my home off in 7 years
Paid it off 2009. My 5.75 % bank CDs went to .0001% so, I paid off my mortgage. Property tax was 600 then. Now 2300.00

 

[elduque1969]

I paid my home off in 7 years
Paid it off 2009. My 5.75 % bank CDs went to .0001% so, I paid off my mortgage. Property tax was 600 then. Now 2300.00

Stack that cash, invest and diversify. Have that HELOC on standby. If you see something and its a good deal jump on it.

 

[james357]

No way I put money I to Bitcoin from a loan. Only play money for something I can't piss on.
If I can't piss on an investment I don't invest money I can't afford to lose.
I got zero sleep last night( hate those nights) so I am not going to make a decision unless I get 6 to 7 hours sleep to clear my mind.

 

[kuduman]

I don't see why you want to borrow MORE against an asset you expect to fall in value. If you buy another house-- and if prices fall, and your primary is underwater you won't be able to get a mortgage so you'll have to buy the second house with cash-- now you have a paid off second house, and your primary 30% underwater.... and you can't sell it without either destroying your credit, and/or selling the other house.

This sounds like saying WHEEEEEEEE!!! and jumping out of the frying pan into the fire. You've reduced your options considerably in case of illness/job loss/whatever.

 

[Cohutta68]

I paid my home off in 7 years
Paid it off 2009. My 5.75 % bank CDs went to .0001% so, I paid off my mortgage. Property tax was 600 then. Now 2300.00

Hey, just clarify,
In your original post you said you’re thinking of getting a second mortgage.

In your third post, I think you said you paid your house off seven years ago, meaning you don’t currently have a mortgage, which means it would not be a second mortgage. It would just be a new mortgage.

If you paid your house off, and don’t have an existing mortgage, I definitely agree with the home equity line of credit angle. Don’t actually pull the cash out.

HELOC’s can provide a little additional protection if you’re in some kind of high liability industry, when they look you up, it won’t be as obvious that you own your home free and clear.

The line of credit will give you the flexibility you’re looking for, for purchasing.

But do keep in mind, it’s a great market for a seller, and a bad market for a buyer. So that’s pretty much a wash if you make that move.

Possibly better to sell while the market is high, for the most you can possibly get, then maybe rent and wait for prices to soften. That’s not a perfect science, but it’s a more reasonable approach. But that would work better if it was a second home, or investment property, and not your primary residence. Basically sell high by low.

A home equity line of credit should have a pretty good interest rate, which you will not pay if you don’t draw the funds. And less closing cost than a traditional mortgage.

 

[Cohutta68]

Given that you paid your home off several years ago, I think you have the discipline to make a reasonable decision here. Some people don’t have that discipline and should not attempt any of the above.

Unless your home was paid off with some kind of windfall, like an inheritance, etc. Or if you still carry credit card debt. In either of those cases I would be more cautious.

 

[Camper292000]

Look at a PNC Bank or other Heloc for your situation. The balance can stay at zero to you need it and then you borrow $5,000 or 50,000 whatever you need at the moment.

I don't exactly remember but I think they will loan you up to 80 or 90% of the property value.