How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask RealEstateAnswer Your Own Question
RealEstateAnswer, Lawyer
Category: Real Estate Law
Satisfied Customers: 28371
Experience:  10+ years in handling Leases, Landlord-Tenant, Foreclosures,Mortgages, and Eviction cases
Type Your Real Estate Law Question Here...
RealEstateAnswer is online now
A new question is answered every 9 seconds

for real estate broker/lawyer can I use my house as collateral

This answer was rated:

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 4 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.

Please let me know if you have any follow up questions or need any clarification on something which I stated above, prior to rating me. Also, please remember to rate my service with 3, 4, or 5 faces/stars, before exiting the site, so I can receive credit for my help. I hope you found it to be Excellent! Only rate my answer when you are 100% satisfied. If you feel the need to click either of the two faces/stars on the left, please STOP and reply to me via the "REPLY TO EXPERT or CONTINUE CONVERSATION "button. I want to make sure your experience with the site was as pleasurable as possible and that you are satisfied with the help I provided.
Customer: replied 4 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.
RealEstateAnswer and 2 other Real Estate Law Specialists are ready to help you