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Updated 4 months ago on . Most recent reply

User Stats

9
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3
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Stephen Fleming
3
Votes |
9
Posts

HEL or Home Equity Agreement.

Stephen Fleming
Posted

Hello. So I’m looking to leverage my current homes equity to use as a down payment for my next primary residence. I will then use my current home I am moving out of as a rental property. 

I have about $62k in available equity I can pull out. I am trying to figure the best way to go about it. I can go Home Equity Loan route: 

HEL would equate to roughly a $600 monthly payment (dependent on rates). The house I would be renting has a current mortgage (including escrow) of $1,100 per month. My new mortgage at my new primary would be roughly $2,500 per month. Based on comps I could get about $2,200 a month in rent. 
that breaks down to :

-$1,100 (+) -$600 = -$1,700 in mortgage/HEL

$2,200 -$1,700 =$500.00 profit

Or the Home Equity Agreement I get the $62k cash with no payment. Either pay it back in ten years or when I sell I have to give a % of the equity to the lending company. 
breakdown

$2,200-$1,100=$1,000 profit 


what are your thoughts?  And has anybody taken advantage of a home equity agreement before and can give me pointers?


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