Author Topic: BUY-Use equity or withdraw from Index fund  (Read 1499 times)

JJ saves

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BUY-Use equity or withdraw from Index fund
« on: November 28, 2016, 09:27:48 AM »
Looking to buy my second property as a Rental if the numbers work. My current home has over 100,000 in equity. I have no debt besides my mortgage. All my money is invested in index funds with only a few thousand in saving.

Question is... Would you pull equity out of your house for the 20% down Rental property, OR pull the 20% out of your Invested index funds?

h82goslw

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Re: BUY-Use equity or withdraw from Index fund
« Reply #1 on: November 29, 2016, 12:26:16 PM »
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NoNonsenseLandlord

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Re: BUY-Use equity or withdraw from Index fund
« Reply #2 on: November 30, 2016, 01:05:31 AM »
I would use a HELOC.  It should be cheap money, and no capital gains taxes, or commissions that you might have with an index fund sale.  Also, you only pay when you actually use it.

If the deal falls through, just pay it back.  Once you sell, it may be hard to get back in after paying taxes.

JJ saves

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Re: BUY-Use equity or withdraw from Index fund
« Reply #3 on: November 30, 2016, 09:07:32 AM »
Missing some key info like:
1. Loan-to-value ratio on current home
2. Total amount invested in index funds
3. How much you need for downpayment

Here are my numbers

1. Loan to value = house worth 310,000  I owe 160,000 = 51%

2. Total Index fund amount I have invested = 100,000

3. Id probably need around 40,000 down payment. Looking at houses 200,000 or less.
« Last Edit: November 30, 2016, 09:09:06 AM by JJ saves »

JJ saves

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Re: BUY-Use equity or withdraw from Index fund
« Reply #4 on: November 30, 2016, 09:20:23 AM »
I would use a HELOC.  It should be cheap money, and no capital gains taxes, or commissions that you might have with an index fund sale.  Also, you only pay when you actually use it.

If the deal falls through, just pay it back.  Once you sell, it may be hard to get back in after paying taxes.

Im new to HELCO loans, please bear with me...

1. Do you tell the lender what the money is for? Or do you just say you need the money for home improvement.

2. Im assuming you can only get a HELCO with your mortgage lender?

3. Are the rates fixed or only offered as adjustable rates?