Borrowing Money from one Property to Purchase Another
REM # F672
By Ilyce R. Glink
Summary: A reader wonders about borrowing money from an existing property to pay off a second property. Ilyce discusses the lender’s role in evaluating debt and income and confirms that you can borrow money from one property to buy another.
Q: Can you borrow the down payment for a new property using cash from a property
you currently own?
If so, is this different from home equity loans or cash-out refinancing?
A: Typically, when you borrow money and use your property as collateral, property,
it's either called a home equity loan, a home equity line of credit, or a cash-out
refinance. In any of these cases, the money you have obtained from an existing
property can be used as a down payment on a new property. The lender of the
new property will look at all of your debt and income to determine whether to
loan you the money for the new home. So, yes, you can borrow to buy a new property
if the conditions are right.
In addition, if you have a bunch of rental properties, it may be possible to
borrow against all of the properties as one entity. But, you'll need to find
a banker who is willing to look at the properties as a whole and work with you
at another level.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO
Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted,
resyndicated or redistributed without written permission from the publisher.
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