Mortgages and Numbers

5 Replies

I just need some clarification regarding home equity loans? For example, if I own a clear free FMV home of $200,000 and I want to purchase another, with a mortgage acquisition, why can’t I put down 99% as the downpayment and have like $1,000 as the loan balance and just own two homes once the $1,000 or whatever the 1% is left?

Arthur Voskanyan

First off, no bank would "refinance" for that low. Everyone is in it for the big bucks! They probably have to do the same amount of paperwork, as they have to do with a half mil project. Why would anyone go through such a lengthy process, just to get return on a meager thousand? I might come off as rude, but if I was a lender or something, I would never go through this much work just for a thousand. Anyhow, banks have to keep tabs on a thousand, just like they have to keep on a mil. @Chris Mason would better guide you in this regard because I'm no lender, nor do I have any personal experience with refinancing. I just stated what I thought was the obvious. Sorry if this came out harsh, it was never the intent...

Ok, let’s say I use the home as collateral and let’s say I put down 75% of that $200,000 ($150,000) and finance the rest of about $50,000. Just to make the numbers bigger for the bank. Would that be legitimate, they still make their interest on $50,000 and I really didn’t put any money down, just if I default they take my home, and I only have to pay up $50k + whatever interest occurs right?

Arthur

Originally posted by @Arthur Voskanyan :

Ok, let’s say I use the home as collateral and let’s say I put down 75% of that $200,000 ($150,000) and finance the rest of about $50,000. Just to make the numbers bigger for the bank. Would that be legitimate, they still make their interest on $50,000 and I really didn’t put any money down, just if I default they take my home, and I only have to pay up $50k + whatever interest occurs right?

Arthur

 What's the point/goal of all this? 

The point of all this is to own 2 homes on paper, without actually paying the downpayment because it’s in your Asset of a home’s appraised value. So, after you on paper state to put down 75% of 200k, you have 50k you are borrowing and which re-investing and renting out in 6 months I would pay off the 50k and own 2 homes free and clear? Now you have $400,000 in Equity!

Arthur.

Originally posted by @Arthur Voskanyan :

The point of all this is to own 2 homes on paper, without actually paying the downpayment because it’s in your Asset of a home’s appraised value. So, after you on paper state to put down 75% of 200k, you have 50k you are borrowing and which re-investing and renting out in 6 months I would pay off the 50k and own 2 homes free and clear? Now you have $400,000 in Equity!

Arthur.

Wow. That's so wrong! Firsty, "after you on paper state to put down 75% of 200k", and the Bank lends you (another) $50k as a deposit (against the same first home you had free and clear), it means that you'd now owe a full $200k between the two homes (not $50k)!  

You need to get your head around that, before creating yet more threads on the same topic! 

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