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can I use my current home as collateral to purchase another home?
I was reading that you could use your home a collateral for another loan. Is that true? I'm looking into investing in a rental home, eventually moving into it. But I can't sell the one I'm in until the real estate market turns around.5 years ago - 3 answers
If your current house is completely paid off, ie no mortgage, then yes. Otherwise no. This is because even if there is equity in the house, the current mortgage lender has the lien on it and no one else will take a subordinated position.5 years ago
Yes, you can use the equity in your home for collateral to purchase another home.
You can tie both homes together on one loan, or you can refinance and draw out the equity in your home as cash, and use the cash for whatever you want, includng down payment on an investment house.
You can't "use your home" as collateral. You can use the equity that you have in your home. That means the bank will lend you the amount of profit that they think you would get if you sold your home today. If, as it sounds, you are upside-down on your loan (you owe more than you can sell for), you have no equity, and the bank will not loan you money against your house.
Also keep in mind that technically if you do this, and get behind on the loan, the bank can foreclose on the house that the loan is against to recover their money.