So I’ve been trying to find this information without talking to a lender because I want to avoid them harassing me but I haven’t had a lot of luck. Searched Reddit and nothing quite answer either, so here’s the situation.
We’ve been looking for a new house for about 6 months in a budget that would allow us to put 20% down without selling the current property right away. Then once it’s empty we would list it – we have quite a few animals and listing with animals would be challenging. We finally decided to increase our budget slightly – and of course, we find a great place…
Here’s the rub – we have the liquid funds to still do 20%+closing, but it leaves us uncomfortably low on liquid cash until the old house sells (monthly income can cover both mortgages, it’ll be tighter than we like but already pre-approved – DTI with 2 mortgages 43% based on gross). We have some equity in the current house. We expect it appraise for around 350k, we owe 275k (still need to do appraisal but this number is conservative). Here are my questions –
Would opening a HELOC as a safety net be a crazy move?
Does the HELOC close when we sell (everyone talks about a draw and repayment periods) – even if it’s only 2 months later and we draw minimally from it?
I tried to research fees/costs but I feel like I need to call to find that info – and I don’t want to trigger all the spam – so are the costs along the lines of an appraisal, origination, and interest (if we make sure to avoid any early termination fees)?
I am aware the smart move is to stay fully in the budget we set, but I REALLY like this place – we’ve been looking for the forever place and this fits it. Is there any way to do this responsibly that I might be missing?
TLDR: Would opening a HELOC as a safety net be a crazy move to bridge the time between old house to new, and what are the details of HELOCs.
Thank you for any insight.