Using a HELOC to buy a new house...

[wyvrn]

I have a rental property that I want to sell within 5 months so we can use the profit as a down on a new home. However, my current renters might have trouble getting approved for financing, and they are under a rental agreement until mid-September. So, I thought about setting up a HELOC on the house and drawing the funds 60 days before buying the new house to deposit into my account. The house is already appraised for more than 125% of the current loan balance, so that's not an issue. But I was wondering, how will the mortgage company (for the home we are buying) look at the HELOC? Since it's a loan and not a cash out, I am sure it will be viewed as debt, which could limit the amount we are approved for on the new house. I have already told the renters I am raising rent, which would help offset the expense of the HELOC loan somewhat as far as monthly income/debt goes. I'm confused about this HELOC thing. Anyone have experience?

 

[wyvrn]

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