I currently own (fully paid off) a 2 bedroom townhouse that, according to sources I've looked up, would be worth around 110K as I recently put 10K into the house to fix it up and get it in pristine condition. I live in IL btw
I have a few questions
First, What is the difference between a Home Equity Loan and a Home Equity Line of Credit? What are the requirements for them? I currently make around 55K annually and have a credit score of just under 700 (688 last I checked) but it should be at above 700 come summer 2017 when I plan on moving out.
I want to borrow 50K so that I can pay off my student loans.
I'd also like to move out and get a bigger house as I'll be getting married next year. With a Home Equity Loan or a HELOC, is it possible to rent out the property that I borrowed against and use the rental income to pay off the 50K I borrowed? I spoke to a real estate agent and I should be able to rent out my house for around 1200$ minus 400$ for tax/insurance/association fees leaving 700-800 left to go toward paying off the 50K loan monthly
Finally, if you have a Home Equity Loan or a HELOC, can you still get a mortgage for another home? I'd have around 50K of my own money (not the loan) saved up to put down on a new house.
Have a house worth 100-110K, near 700 credit score, 55K Annual salary. Want to borrow 50K to pay off student debt.
Can I rent out home after taking out equity loan or HELOC and use rental income to pay it off?
Can I get a mortgage for a separate house that I plan to live in myself, if I have an already existing equity loan or HELOC? I'd have around 45-50K for a down payment.
The difference between a home equity loan and line is that the loan is a fixed amount usually with a fixed rate and payment terms. I line is a revolving line of credit you can keep drawing upon. The rate is based on an index that can fluctuate over time.
You should be able to qualify with good credit, income and the equity in your townhome. Once you get the loan or line you can do whatever you'd like to with the home.
I myself would be wary of tying unsecured student loan debt to your home. It's great that you want to pay it off but you'd be transforming unsecured debt into secured debt which is not ideal should you find yourself in trouble somewhere down the road. I'd be interested to find out what others may think of this theory.
You might consider not saving quite as much as the $50k you're thinking of for your next deposit, but using say half(?) of it to get your student loan down quicker instead. You'll still have all the equity you now have in your townhouse that you can add into the mix when it comes to finding your next primary. In general, if your townhouse is NOT a property that you would buy at it its current value if PURELY for investment, then you might also consider - SELLING it?
Congrats on your upcoming nuptials! All the best...
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