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RealEstateAnswer, Lawyer
Category: Real Estate Law
Satisfied Customers: 23426
Experience:  9+ years in handling Leases, Landlord-Tenant, Foreclosures,Mortgages, and Eviction cases
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for real estate broker/lawyer can I use my house as collateral

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for real estate broker/lawyer

can I use my house as collateral to buy an investment property? And will my house still be at stake until the loan is completely repaid? Assuming that the house can be used as collateral, will I still need to pay 20% down on the loan and closing costs?
Hi! I will be the professional that will be helping you today. I look forward to providing you with information to help solve your problem.

Good afternoon. Is the home owned free and clear or is there a mortgage still on it?
Customer: replied 3 years ago.

yes. there is still a mortgage on it. but the value has gone up at least 200k in the last 3 years

Thank you for the additional information. The only lender that would possible consider doing this deal, would be a private one. If they were to do it, the current mortgage and any other 2nd, if one exists, would have priority of the loan, which they are making. As such, in the event that you defaulted on the loan and the private lender had to foreclose, the 1st and 2nd ( if one existed) would have to be paid off first, before they get paid. If there is equity in the home at this time, then you may want to consider refinancing the home, pulling out the 200K and using some, if not all, as a down payment on the investment property that you want to buy. If there are issues with your credit and debt to income, which are preventing you from obtaining a mortgage through a major lending institution, then your only other option would be to some a private person, who was willing to loan you the money and take the risk on the home that is up for collateral to hold its equity, in the event of default. A lender would not allow you to take a loan and put the home up as collateral, since they know other lenders are ahead of them and they may not get paid.

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Customer: replied 3 years ago.

Thanks so much. If I may ask, is there any way to buy an investment property in NY without putting 20% down and closing costs?

You are welcome. 20% is at the discretion of the lender. Some may allow 10% and every lender has different requirements and/or restrictions. That is why, it is best to often consult with a mortgage broker, instead of with a bank directly, since the broker is able to contact lenders which you may have not heard of, who will loan on an investment property, with less then 20%. As far as closing costs, it may be possible to roll those into the loan as well or you can see if the seller would agree to pay them or a portion.
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