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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: psyclotr0n on October 05, 2015, 10:16:01 AM

Title: Raising capital and downsizing just before FIRE
Post by: psyclotr0n on October 05, 2015, 10:16:01 AM
Hi folks, anyone have experience thinking through how to hold on to their primary residence as a rental property just before FIRE and downsizing to get expenses down?

It seems to me that while a second mortgage (if rates are still low) provides more flexibility than buying with cash from the 'stash. However, if you wanted to buy a second house while you still had a job, do you need to already be collecting rent on the first property for the bank to consider that rental income (i.e. so that you can afford the second mortgage)? Sure you could claim the second property is a rental but the idea is that you could "declare" much more rental income from the bigger primary house.

Or is there another/easier way of raising capital leveraging equity on the primary house, i.e. cash-out mortgage or HELOC/equity loan?