Using Equity Out Of Your Current Home To Buy A New Home

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Buying a new home before selling your current home is a real possibility in 2021. As the real estate market has heated up, deposits are increasing, so to buy a home in the Triangle area will require you to have a higher amount of cash upfront when you make your offer instead of most of your down payment being paid at closing. Buyers are basically paying most of their down payment to the seller as a non-refundable deposit at the time the offer is accepted.

Get an equity line on your current home

If your down payment is mostly the equity in your current home, 401K, or the stock market, or if you are simply short on cash at the moment, one of the easiest ways to get cash to buy another property is to get an equity line on your current home.

Getting an equity line, also known as a HELOC, is fast, easy, and you can get it set up without having to use it right away. Since it’s a line of credit, it is different than doing a refinance where you receive cash at the closing; if you refinance your mortgage and get any cashback to you, the interest rate on the whole mortgage is at a higher interest rate compared to refinancing only the remaining balance on your mortgage.

Equity line interest is variable, so another benefit to buying a property using equity line money is that you are only responsible for paying a minimum payment on the equity line money you have used so it’s easier to qualify for the mortgage on the home you are purchasing.


You can use an equity line whether you plan on keeping your current home or selling it once you find your next home so you can use it towards an investment property or second home as well as you buying before you sell. You can also get an equity line if you have paid off your mortgage. Your mortgage lender may have you use equity line money to pay off other loans to help you consolidate monthly debts. Flexibility means you can use it to your best advantage based on your circumstances.

I keep an equity line on my home because when an opportunity arises for a great deal of any kind, time is always limited. If you don’t know how much money you have available and if you have to jump through hoops to get it, you may lose the deal.

A recent example

A recent example; in May, I had a buyer who missed out on a property to another cash buyer because my buyer didn’t have their equity line already in place. We wrote an offer with a slightly longer closing date for my buyer to close on an equity line and the later date was the deciding factor why my client didn’t get the property.

It is a good idea to get an equity line and have it ready

Contact me and I’ll refer you to banks that are easy to work with and have the equity line process streamlined. Going with your current bank or mortgage company may or may not be the best/fastest option. This costs very little so even if you’re not sure if you’re going to be buying another home, it is a good idea to have it ready.

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Amy Shair, Re/Max United

Award Winning Agent Serving Durham, Cary, Raleigh & Chapel Hill for 20+ Years

"I will give it to you straight - NO FLUFF!"

(919) 818-5001

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