What money should I use to buy our next primary residence?

5 Replies

Hey everybody!

So I'm in the military, and I'll be moving next summer to Florida. Conveniently, I'm down here for training, and looking for a house while I'm here. I think I've found one, but I'm having trouble deciding how I should buy it. 

I currently own a home in Virginia with a VA loan, with about $30K in equity. I also have enough funds to put 10 or 20% down on the house if needed.

I plan on renting out the house in Virginia when I move to Florida, so I was thinking about taking out a HELOC on that house, and using that to buy the house in FL with a second home loan, with only 10% down. When we're closer to moving down, I was planning on doing a cash out refi on the second home into a VA loan and using that money to pay back the HELOC and hopefully get a couple bucks extra from it.

Any comments or tips here would be great to hear! Please let me know what you think!

Are you unable to refi out of the home with a conventional loan to get back all of your VA benefits? I don't know if you have been paying attention to the DC news, but there is a very good chance that John Taylor will be appointed as the next chairman of the FED. He is a well know hawk on interest rates, so there may be a chance interest rates rise as soon as December. If you are able to lock in interest rates now through a refi, now is the time to do it.

Hey Jake thank you for your service! I’m in a similar situation. I have a VA loan in Virginia as well and if I need to refinance I can because I lived in the home for a year continuously. I also know that there are certain exceptions to the VA loan program where if you are PCSing to another location you may be able to use it again. I would get with a local VA rep in your area. I know the ladies in Norfolk are ultra experienced and know what you can and can’t do. If you can get it done now that’s optimal because the rates are likely to start bumping up within the next few years due to economy’s performance and the current administration. However, don’t rush into anything either. Be thorough and very sure of your decision. If you do decide to keep the VA loan you will need to have four to six months of expenses saved up to look favorable for another mortgage. I hope this helps and if you have any questions I’ll do my best to help you!

You are definitely able to use your VA loan benefits on more than one purchase. I think the problem you’d run into is with how much benefits you have left if the previous VA Loan was left in place. Due to the huge cost of housing in Florida it is unlikely you would be able to have both places under the same $36,000 benefit ($36,000 is the amount of money the government is will to cough up if you default - this is how you get the loan without paying PMI).

The great thing about the VA Loan is if you can prove you are upgrading (especially for family planning purposes) you don’t need to be PCSing to reuse the VA loan benefits if you have some left over. A good lender that understand the VA loan and the local market can work magic.

I didn’t want to refi into a conventional yet because I don’t even have 20%, I definitely did not buy right on the first house, but I’ve since learned from that mistake! 

On the other hand, it may be beneficial in the long term to lock in the current interest rates and pay a few months on PMI over a higher interest rate.

I am still eligible for the va loan on the Florida property, barring any changes to the va loan program between now and then. 

Thank you guys for the comments!

@Jake Ferguson how much do you owe on your current residence and what kind of price range are you looking at in Florida?

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