If I’m buying another home in a different state can I refinance or use my homes equity to buy the other home?

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I have a 2 family home in Massachusetts. The value is 246,700.00. I owe only 139,000.00. Can i refinance and use equity to buy another home in Florida. I plan on moving to Florida eventually and would like to use the money for a downpayment.

I plan on keeping the 2 family and renting it out to pay for the mortgage once I leave but my fear is that I am going to end up losing due to nonpaying tenants. What if I can’t afford my old home. Can i lose both homes, or will I have to sell my 2 family home and hope that the selling price will cover the amount i owe on the loan.

Will bankruptcy effect my new home in Florida? I am looking at worse case scenario here. My 2 family can be a money maker when the economy gets back on track.

4 Comments
  1. Reply
    ananamas
    May 1, 2011 at 2:01 am

    Of course you can do that.

    As far as your questions – if you pick good tenants, and have a good management company, you hopefully won’t have a problem. But if you did, the worst that would happen is your Mass house would be foreclosed upon, and you’d still have your Florida house. Foreclosure destroys your credit for a number of years, but if you already own the Florida house, already have a mortgage on it, and keep paying that mortgage as agreed, the foreclosure won’t affect your house in Florida. It would, however, probably prevent you from refinancing or moving again within 7 years.

    Also, I think when you said bankruptcy you meant foreclosure – you wouldn’t have to file bankruptcy (and probably wouldn’t want to).

  2. Reply
    9 daughters
    May 1, 2011 at 2:24 am

    You can certainly do that but one of the conditions of most refinances is that you still have to live in the home.

    In a worst case scenario and you lose the old home it shouldn’t affect your new home, assuming you can still make the payments on the new home. In other words, if one of your homes goes into foreclosure they can’t take the other home too. It doesn’t work that way. The only way you’d lose both homes is to default on both loans.

  3. Reply
    bizatch2000
    May 1, 2011 at 3:21 am

    1. Yes you can use a home equity for anything you want.
    2. You only lose your homes if you don’t make payments, don’t buy two if you can’t afford to cover periods of tenant non-payments and unexpected expenses.
    3. Once you have a mortgage a bankruptcy does not change the terms and why file bankruptcy ever? You would be foreclosed on instead without needing bankruptcy.
    4. Bad economy is good for rental properties, good economy and everyone buys homes (eventually). You only need two good tenants, hire a solid reputable property management company and factor their costs into your expenses. It’s not as if you are trying to fill a large complex.
    5. FYI, you only need 3% down to buy a home in general. 0% in USDA rural areas. Also, Florida property is among the greatest buys right now. Don’t ravish your home equity if you don’t need to. Just open a HELOC (ask a mortgage person) and use what you need to put down a down payment and sit on the rest for emergencies (nonpaying tenants…etc.)

  4. Reply
    usmaleinfl
    May 1, 2011 at 4:09 am

    You can use the equity. Foreclosures in Florida at this time offer some really great buys. Interest rates are very low. Being an absent landlord is really difficult, I would suggest that you hire a rental manager. They can really help keep the 2 units rented. They conduct background checks and have rental contracts to protect you and your property. I would be happy to recommend an rental agent.

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