Getting 100% equity out of my future home
We are moving to Colorado Springs this summer and plan to retire from the military in the area. Our plan is to buy a house for cash to live in for free, until we have enough savings accumulated to buy land and build a house. I am anticipating to start construction at the end of 2018. I do not want to carry debt on my final home.
The only way to be able to do this is to take 100% of the money we invest in the first home and borrow it back just prior to construction. Otherwise we would have to rely on a 20% appreciation in home values to get our money back with a regular HEL that gives 80% max.
Our max. budget for the first home is $100,000 (total cost including closing costs, improvements etc.), with as little renovations/improvements as possible since we need to move in immediately once we arrive and it would not be feasible to find somebody to fix the place without supervision.
So the question is: how do I find the best way to finance 100% of my home's value? I came up with two scenarios:
1. Get a VA home equity loan for 100% of the home value. Possible issue is the length of term (max 15 years) and higher interest rates (over 6%). But it looks like Quicken Loans does offer loans that are cheap and 30 year term.
2. Sell the house to my sister (on paper only) with no money exchanged and buy it back with a VA mortgage with 0% down. She would transfer me the money upon receipt so we have the funds for the new house. This offers 30 year term and lowest interest rates.
An issue with involving the VA is that we are required to live in the home for a certain period - I'm not sure how long. In reality, we want to rent out the house as soon as the new one is finished and continue on as a long term rental.
Has anybody been in this situation before? Are there any other solutions to get my initial investment back without selling the house? Thanks.
Sorry for the long post.