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Steven Becker Asked:

Feel free to email me back. My question is: I have accumulated a total debt of approximately $60k with a net worth of roughly -$16k. The debts are with numerous companies for numerous reasons including credit cards, auto loans, student loans, etc. What I want to know is, with the current foreclosure market being like it is and so many homes being "dumped" so cheaply and under value, is it possible to find a home with a built-in equity to purchase that I can turn around and finance my other debts into the equity on the mortgage loan? I would consider it the opportunity to buy a home, while also "consolidating" my debts into the remaining equity of the home and reducing my number of payments and overall payment amount. Does this sound like a realistic and possible scenario that can be pursued? [Plano TX]

01/18/2009

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Answer Provided by: Unknown [01/19/2009]
 

Becker, Hi. Regarding your question about taking equity out to consolidate your bills you must have at least 20% equity to do so in the State of Texas. If you do get one of these good buys on the market you must wait a year if going FHA or six months if going conventional to do a cash out. The reason is the mortgage companies will take the lesser of the purchase price or appraisal for the values during these time frames. Safe period 12 months on title but remember you must have the 20% equity to get cash out.