how would you pay for this house purchase? heloc, regular mortgage, cash?

**151** · 04-21-2011, 08:22 AM

My mother in law is seriously considering moving out of her 40 year old suburbian home on three acres, and into a basically new larger home on .5 acres about a quarter mile down the road.

We are curious what is the best combination of financialy wise and safe and easy to deal with, way to make the purchase.

She theoretically could pay cash for the house (taking a large chunk of cash our of her savings at 60 years old)

She could get a HELOC against one or both of the other two homes she owns. ( not sure how this would work out long term) and rent the house she is currently in.

She could get a traditional loan for the new house and rent the house she is now in.

The value of her old house on the three acres is about the same as the price of the new house she wants to buy.

The rent from her old house would likely be twice her intrest only payments, but not enough to cover a mortgage payment.

Or I could be wrong about everything.

Any suggestions? Thanks for the help.

**Greg** · 04-22-2011, 06:54 AM

Your mother in-law needs to talk to a local lender about her options.

She might not be able to get a heloc on a house she is not going to live in. Lenders have lot of new rules these days so she needs to get face to face with a lender to see what options she has.

Does she want to be a landlord? At age 60, most people want to take it easy, not start up a rental business. If she doesn't want to be a landlord then her best option is to sell the house and use the funds to buy the new one.

**MikeAustin** · 04-26-2011, 06:34 PM

I would suggest for your mother in law to confide with local lenders so that she could be given some advice regarding this. The options are there already but they will help her choose the best by presenting like a credit lay-out to her.

**EugeneRealEstate** · 05-09-2011, 11:14 PM

Chances are if you are going to get a heloc you will not get enough to buy the house since they are of the same value. I would consider a combination of a few things. Get a loan buy the house she wants. Take the money in the bank and put into some interest bearing CD's. That way if your are pay 5% on your loan and your getting 1% on your CD's your interest in effect is 4%. Rent out the other house and you might just find that everything is very close to being all covered. Good luck.