Bought a house with equity, How can I use it?

Question

Hi friends,
 
Sorry for this question, I am a total newcomer...

I just bought a turnkey property and it has been appraised by the bank for $10k more than the price in my contract. Is there any way to use that equity that I just got with my house?.

Thank you very much in advance, This forum is really fantastic!

Jon Holdman · Answer

What's it worth?  $10K in "equity" on a $100K house means you have enough to cover the costs if you sell.  You have no equity.  On a $200K house, you're in the hole.  On a $50K house, you have enough to cover the costs and put a little cash in your pocket, but not enough to take anything out.  The best you're going to do on a cash out refi is 80%.  And you'll likely need to hold it for a year.  There will be costs on the refi, I'd guess around $4000 for a $100K loan.

Will Barnard · Answer

Jon gave great answers., in a nut shell, no, your $10k equity is just on paper, it really does not exist at this point in time and costs to get it out almost exceed the equity. Find another way to fund our next deal.

Jon Holdman · Answer

At best, after a year, you might be able to refi for $64K.  Say $3000 in costs, so net $61K.  If you owe less than that, you might get some cash in your pocket.

Antonio C. · Answer

Thank you for your answers!

I paid $70k and the appraisal is for $80k. I was not thinking in selling, I was wondering if I can get those $10k from the bank to buy another property....

Thank you!

Bill Gulley · Answer

Nope, not really, unless you buy it and market it using that appraisal and sell it for more. And, in that case the value is what you're paying not what the estimated value is as shown on the appraisal, buying from a bank, most likely. Consier it a decent buy rather than having made any profit in equity. :)

Bought a house with equity, How can I use it?

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