It’s a fact that people outgrow their homes. The kids need bigger rooms or rooms of their own. The question is, can using the equity in the present house give you enough money for a downpayment on a new house?
Can you rent out the present house to cover your mortgage? Will a mortgage company accept the present house as a rental property? The Nova Financial Group answers some mortgage FAQs in this video.
Can You Use the Equity in the House as a Downpayment On a New House?
Yes. The house would require revaluing to discover if it’s worth enough to take out the equity.
Keep in mind that you now have two mortgages to pay.
Can You Rent Out the Present House to Cover the Mortgage?
There are considerations before renting out the house. One, is the area supportive of rental properties? Two, the mortgage company needs to know if the house fits the rental value of 75 percent of the sale price as well as if the rent asked covers the mortgage payment.
The most important question for you is if the property makes good sense as an investment property. When you have the answer to that question, then your mortgaging will fall right into place.