Home equity loan for new house downpayment??

[Kalika]

Hey everyone -

 

I bought my house only 3 years ago, with 20% down @ 5% interest (my purchase price was $135K). I made the mistake of buying a house that really wasn't right for me because at the time, my options were very limited and the interest rates were low to buy. I am looking to buy a bigger home within the next 2-3 years but I have very little $ for a downpayment on a bigger house. The plan would be to use my current home's equity to use as a downpayment but I really don't know the ins and outs of this - is this what most people do to get a bigger house ?? Other than that, I have no idea what my options really are .. but I am really leery of loans/debt in general.

 

Anyone here work in finance or have personal experience with this??

 

Thanks ahead of time. ..

-K

[avman]

Hi. This sort of thing is done all the time. People roll the equity from their previous home into the new home. However you have to keep in mind there are costs with buying a new home and selling the old one. Those costs usually eat into the equity you had built up in your old home. So you never get to keep all of the equity when you buy the new house. Some is always lost in the process of buying and selling.

 

If you call some real estate agents they can come over and give you a sales pitch about what their fees are and how the process works to buy a new home.