Chris - in your scenario, if you pull $450k out of a house with $600k in equity, you would still be left with $150,000 in equity (25% of its value,) given no further appreciation or depreciation. However, we know that housing markets aren't static and changes in value do happen, typically appreciation. Depending on your home, the location, etc. in the Boston area it is unlikely your home will depreciate 25%. Even in the great recession of 2008, MA home price decreases varied, with an average across the state depreciating around 15% (some areas/towns saw no depreciation). Also, it depends on what you plan on doing with the $450,000. As we suggest, a HELOC is a good way to access cash for a down payment in a new home. If that property depreciates after buying it (a good real estate agent can help you make a sound purchase to mitigate some of those risks), losses are only realized at the time of a sale. So if you don't need to sell in a down market, you will probably be ok. Hope this helps and reach out with any other questions. Cheers!
Kamar - great question. Since the HELOC is a mortgage, the closing attorney when you sell will gather all of the outstanding mortgage info and make sure that those are settled with your proceeds from your sale. This is one thing that is very easy for a seller, you just need to provide the attorney's with the info on your mortgages and they take care of it! Let us know if we can help with anything else.
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Thank you so much!
Hypothetically, I have 600,00 in equity, I pull 450 of it, but then my property depreciates. What then?
Chris - in your scenario, if you pull $450k out of a house with $600k in equity, you would still be left with $150,000 in equity (25% of its value,) given no further appreciation or depreciation. However, we know that housing markets aren't static and changes in value do happen, typically appreciation. Depending on your home, the location, etc. in the Boston area it is unlikely your home will depreciate 25%. Even in the great recession of 2008, MA home price decreases varied, with an average across the state depreciating around 15% (some areas/towns saw no depreciation). Also, it depends on what you plan on doing with the $450,000. As we suggest, a HELOC is a good way to access cash for a down payment in a new home. If that property depreciates after buying it (a good real estate agent can help you make a sound purchase to mitigate some of those risks), losses are only realized at the time of a sale. So if you don't need to sell in a down market, you will probably be ok. Hope this helps and reach out with any other questions. Cheers!
My biggest question is how do you settle the heloc of you are selling the home? Do you have to pay it off ahead of the sell or after?
Kamar - great question. Since the HELOC is a mortgage, the closing attorney when you sell will gather all of the outstanding mortgage info and make sure that those are settled with your proceeds from your sale. This is one thing that is very easy for a seller, you just need to provide the attorney's with the info on your mortgages and they take care of it! Let us know if we can help with anything else.
@@erikgould844 Thank you so much!
You guys are scary.