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How to Utilize Your Cash Investment in Your Home
Have you ever noticed how hard it can be to get to the equity
in your home?
Recently I had a client come to my office who had quite a bit
of equity in their home. I'm not talking about $50,000 or even
$200k, I'm talking about over $250k. I was asked to get 80% out
of their home so that they could re-invest the monies
elsewhere.
From an application stand point this person had no reason not
to qualify. They had great credit scores, tons of assets and the
loan-to-value on the home was nothing to be concerned about. The
only problem we came across was that they were business owners
and had taken a loss on their taxes the year before therefore we
could not show any income documentation.
Lenders have ways of protecting their interest through
limiting cash out and verifying their investments. Although my
client had everything with exception to the income documentation
we were limited to getting $250k out of their home. Locked into a
good rate, we moved forward and closed the deal that limited us
with getting the cash out.
We then went looking for a lender that would be more willing
to give us the cash out but knew it would be at a higher rate due
to the potential for risk. The rate for the rest of the money
turned out to be about 1% higher.
This got me thinking about utilizing my home as an
investment:
1. How much does the bank pay you when you pay down your loan,
yet they maintain their right to take your property until you
have paid your entire debt?
2. What happens when you find yourself in a difficult
situation and need to pay less than the monthly payment?
3. What happens when you need to get to the money you have
diligently worked so hard to pay down? You have to qualify, yet
you own the asset.
My recommendation is to maintain a way to get to your
investment. I am not so much recommending that you take out the
money as you at least set up a Line of Credit so that you can get
to the money should you need it.
Angela Talent, Your Mortgage Advisor! is a loan agent for
Allied Capital Loans in Folsom. You are free to distribute this
article as long as you include this resource box and make all
links active.
 MORE RESOURCES updated Fri. March / 12 / 2010
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