Will a HELOC do the trick?

[RASAP]

I am relocating and want to have about 2 months of overlap in ownership of my current and new home. The home I am selling has no mortgage and should net around 450k. The home I am buying will require about 400k at closing (I have already paid 20% down on the new home). Is a HELOC the way to go to accomplish this? Is there something better? My credit is excellent and I have very little debt (< $3000) so I don’t think qualifying will be an issue.

 

[HawkeyeNFO]

Sure you can get a HELOC, I assume you mean on the old home(?). You'll just have to pay it off at closing when you sell the house. Make sure you understand the fees and expenses for paying it off early.

 

[euro]

Yes, HELOC seems like a great way to go for this - you'll have to shop around as different lenders will offer different products, especially related to the maximum % of appraised value. Since you project $450k net, I assume you are expecting appraisal north of 500k? Typically, you'll get maybe 70% of value as a HELOC, so you may need to look for a higher %-age to extract the full 400k. The details will depend on your specific situation (income, other assets, W2 job, etc)

 

[Aerides]

don't put the old house on the market until after you secure the heloc. And yes it becomes null/due in full the second you close.

 

[38Chevy454]

HELOC could work out well. Be careful of fees (HELOC initiation and then monthly interest) since you only need the HELOC for potentially a couple months. I do agree that you will likely not get the full amount you need $400K if you only have $450K net equity. You might need to come up with some extra cash to get the total amount you need to purchase the new house. The % of equity the HELOC will max out is up to your lender and what their policy allows. Also as stated the HELOC will be paid out of closing settlement on the old house; which is not a problem for you, just be aware that will be required.

 

[RASAP]

Thanks to all for the feedback. I'll definitely check out the HELOC option.

 

[RASAP]

Does anyone have experience with Citizens bank (www.citizensbank.com)? I was contacted by them this morning about a HELOC and they seem to have just what I am looking for. They say they will give me a HELOC with absolutely no up-front cost equal to 80% of the value of my current home. I was up front with them on how I plan to use the loan (for only 2 months +/-) and would be paying it off as soon as I sell my current home (as required). I was told there would be no problem doing that and that there is no pre-payment penalty when doing so. Since I am using this loan for a very short term, I am not too concerned with the interest rate. Should I be? There is an annual maintenance fee of $50 starting the second year. It almost sounds too good to be true. Is there something else I need to be asking or looking out for? Thanks in advance.

 

[HawkeyeNFO]

I used Citizens Bank for a construction loan in 2019 in Virginia. They were as good as any other bank. I'd not worry about them.