{"id":9229,"date":"2022-04-08T16:00:55","date_gmt":"2022-04-08T23:00:55","guid":{"rendered":"https:\/\/www.flyhomes.com\/blog\/?p=9229"},"modified":"2026-02-18T12:23:40","modified_gmt":"2026-02-18T20:23:40","slug":"using-equity-to-buy-your-next-home","status":"publish","type":"post","link":"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/","title":{"rendered":"A guide to using home equity to buy your next home"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">If you\u2019ve built up enough home equity, you can use it to buy your next home.<\/h2>\n\n\n\n<p>Even in today\u2019s tough seller\u2019s market, home equity is a powerful tool for buyers. Use this guide to learn how to estimate your home equity and the various ways you can use it to fund your next down payment.<\/p>\n\n\n\n<p><strong>What you\u2019ll learn:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Home equity is the difference between how much you owe toward your home loan and how much your home is worth<\/li>\n\n\n\n<li>You can use the equity in your current home to purchase your next one<\/li>\n\n\n\n<li>You can liquidate your equity with a home equity loan, HELOC, or cash-out refinance<\/li>\n\n\n\n<li>Once you buy your next house, you can sell your first one or rent it out to pay off the equity loan<\/li>\n<\/ul>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">In this article<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69ea62ec77375\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69ea62ec77375\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#What_is_home_equity\" >What is home equity?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#How_to_buy_your_next_home_with_home_equity\" >How to buy your next home with home equity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Determine_how_much_equity_you_have_in_your_home\" >Determine how much equity you have in your home<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Decide_which_type_of_home_equity_loan_to_get\" >Decide which type of home equity loan to get<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Home_equity_loan\" >Home equity loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Home_equity_line_of_credit\" >Home equity line of credit&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Cash-out_refinance\" >Cash-out refinance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Reverse_mortgage\" >Reverse mortgage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#All-in-one_short-term_loan_program\" >All-in-one short-term loan program<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Apply_for_a_loan_and_close_on_your_next_home\" >Apply for a loan and close on your next home<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#Wrapping_up\" >Wrapping up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/#FAQ\" >FAQ<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_home_equity\"><\/span><strong>What is home equity?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Home equity is the amount of your house that you own. In other words, it\u2019s your home\u2019s appraised value, minus how much you owe on your mortgage. For instance, if you just bought a $300,000 home with a 20% down payment, then your equity in that property is $60,000.<\/p>\n\n\n\n<p>As you pay down your loan and as property values rise, your home equity increases. Thanks to recent surges in the housing market, homeowners with mortgages enjoyed a <a href=\"https:\/\/www.corelogic.com\/intelligence\/homeowner-equity-insights\/\" target=\"_blank\" rel=\"noreferrer noopener\">29.3% increase<\/a> in their equity in 2021. In fact, the average year-over-year home equity gain in 2021 was $55,000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_buy_your_next_home_with_home_equity\"><\/span><strong>How to buy your next home with home equity<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Many homeowners rely on their home equity to buy their next home before selling their current one or to purchase a second property (whether as a vacation getaway or an investment).<\/p>\n\n\n\n<p>For example, let\u2019s say you want to buy a new home for $350,000, but you don\u2019t have enough in savings for a 20% down payment. You can take out a loan against your current home\u2019s equity and put that money toward the down payment (and avoid mortgage insurance in the process).<\/p>\n\n\n\n<p>Home equity loans are an attractive option because they generally have low interest rates and are easier to get than personal loans. This is because they present less risk to the lender, since your home serves as collateral. Here\u2019s what that process looks like:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Determine_how_much_equity_you_have_in_your_home\"><\/span><strong>Determine how much equity you have in your home<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You can get a vague idea of your home\u2019s value by looking up your property on an online listing site or home evaluator\u2014but these tools aren\u2019t exact.<\/p>\n\n\n\n<p>For a more precise figure, contact your real estate agent and ask for a competitive market analysis. Your agent will then estimate <a href=\"https:\/\/www.flyhomes.com\/blog\/how-much-is-your-home-worth\/\" target=\"_blank\" rel=\"noreferrer noopener\">how much your home is worth<\/a> by comparing it to similar properties nearby, while also factoring in your house\u2019s size, condition, and any recent home improvements.<\/p>\n\n\n\n<p>To determine your total equity, take that value estimate, then subtract your remaining mortgage loan amount.&nbsp;<\/p>\n\n\n\n<p>Keep in mind that your lender will eventually require a home appraisal to determine your home\u2019s value. But getting an estimate now will still help you weigh your home equity loan options.<\/p>\n\n\n\n<p>\n<a href=\"https:\/\/calendly.com\/flyhomes-meetings?utm_source=Blog&amp;utm_medium=guide_to_using_home_equity\" class=\"inline-btn-new\">Get in touch to discover your home\u2019s value <\/a>\n<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decide_which_type_of_home_equity_loan_to_get\"><\/span><strong>Decide which type of home equity loan to get<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There are several different ways to use your home equity to fund a down payment. Each loan type has its pros and cons, so be sure to speak with a mortgage professional or your Flyhomes loan officer before making a decision.<\/p>\n\n\n<figure class=\"wp-block-unsplash-image wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"9230\" data-permalink=\"https:\/\/flyhomes.com\/blog\/using-equity-to-buy-your-next-home\/p50hcc0yrl0\/\" data-orig-file=\"https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=2560&amp;h=1440\" data-orig-size=\"2560,1440\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;11.0&quot;,&quot;credit&quot;:&quot;Derek Thomson&quot;,&quot;camera&quot;:&quot;FC6310&quot;,&quot;caption&quot;:&quot;aerial view photography of white house near swimming pool&quot;,&quot;created_timestamp&quot;:&quot;2017-06-01T10:50:05-04:00&quot;,&quot;copyright&quot;:&quot;Derek Thomson&quot;,&quot;focal_length&quot;:&quot;8.8&quot;,&quot;iso&quot;:&quot;100&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;aerial view photography of white house near swimming pool&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"\" data-image-description=\"&lt;p&gt;aerial view photography of white house near swimming pool&lt;\/p&gt;\n\" data-image-caption=\"&lt;p&gt;Photo by &lt;a href=&quot;https:\/\/unsplash.com\/@derekthomson&quot; rel=&quot;nofollow&quot;&gt;Derek Thomson&lt;\/a&gt; on &lt;a href=&quot;https:\/\/unsplash.com\/?utm_source=the-living-room&#038;utm_medium=referral&quot; rel=&quot;nofollow&quot;&gt;Unsplash&lt;\/a&gt; &lt;\/p&gt;\n\" data-medium-file=\"https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=300&amp;h=169\" data-large-file=\"https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1024&amp;h=576\" src=\"https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&#038;ixlib=rb-1.2.1&#038;fm=jpg&#038;q=85&#038;fit=crop&#038;w=1024&#038;h=576\" alt=\"aerial view photography of white house near swimming pool\" class=\"wp-image-9230\" width=\"1024\" height=\"576\" title=\"\" srcset=\"https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=300&amp;h=168 300w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1024&amp;h=576 1024w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=150&amp;h=84 150w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=768&amp;h=432 768w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1536&amp;h=864 1536w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=2048&amp;h=1152 2048w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=610&amp;h=343 610w, https:\/\/images.unsplash.com\/photo-1496328488450-9c5c5d555148?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2NDk0NTg0NDk&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=370&amp;h=208 370w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>There is more than one type of home equity loan. Each has its pros and cons but they are both available to you as a way to buy your next home<\/figcaption><\/figure>\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Home_equity_loan\"><\/span><strong>Home equity loan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A <a href=\"https:\/\/www.flyhomes.com\/blog\/all-about-home-equity-loans-and-helocs\/\" target=\"_blank\" rel=\"noreferrer noopener\">home equity loan<\/a> is a lump-sum loan that allows you to convert your home\u2019s equity into liquid cash that you can use for a down payment on your next house. You receive funds equal to the equity value of your home, then repay it with interest.&nbsp;<\/p>\n\n\n\n<p>This loan functions as a second mortgage on your current home that you repay over five to 15 years, depending on your loan terms. Or, if you\u2019re buying before selling, you can repay the loan once you\u2019ve sold your current home.<\/p>\n\n\n\n<p>Home equity loans typically have fixed interest rates, which means your monthly payments remain stable.<\/p>\n\n\n\n<p><a href=\"mailto:hello@flyhomesmortgage.com\" class=\"inline-btn-new\">Learn about home equity loans <\/a><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Home_equity_line_of_credit\"><\/span><strong>Home equity line of credit&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A home equity line of credit (also called a HELOC) allows you to withdraw money up to a specific limit, within a certain amount of time. Similar to a home equity loan, your lender will make funds available to you, determined by the amount of equity you have in your home. But instead of it being a lump sum, it is a credit line that you can borrow from as needed and only repay what you use.&nbsp;<\/p>\n\n\n\n<p>As you pay off what you\u2019ve borrowed, your line of credit resets so you can borrow again. In this way, a HELOC functions somewhat like a credit card. Typically, you must repay the entire HELOC within 10 to 20 years.<\/p>\n\n\n\n<p>Also like a credit card, HELOCs allow you to make payments either solely on your accrued interest, or on accrued interest plus principal.<\/p>\n\n\n\n<p>However, unlike home equity loans, a HELOC\u2019s interest rates are variable, meaning they fluctuate with the market. This means your monthly payments may fluctuate as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cash-out_refinance\"><\/span><strong>Cash-out refinance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A <a href=\"https:\/\/www.flyhomes.com\/blog\/the-beginners-guide-to-refinancing\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash-out refinance<\/a> increases your current mortgage amount and is typically limited to 80% of your current home\u2019s value. When your home appreciates, you can increase your loan amount to account for the higher price of the home and keep the cash difference between what you\u2019ve already paid off and the new, higher loan amount.&nbsp;<\/p>\n\n\n\n<p>Since this is a refinance, you will have to pay <a href=\"https:\/\/www.flyhomes.com\/blog\/what-are-closing-costs\/\" target=\"_blank\" rel=\"noreferrer noopener\">closing costs<\/a>, which can be 2-5% of the new loan amount. It will also change the mortgage interest rate you pay, so this option is better taken when rates are low.<\/p>\n\n\n\n<p>Homeowners typically use this option if they\u2019re looking to buy an investment property rather than their next primary residence.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reverse_mortgage\"><\/span><strong>Reverse mortgage<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/can-i-use-a-reverse-mortgage-loan-to-buy-a-home-en-238\/\" target=\"_blank\" rel=\"noreferrer noopener\">home equity conversion mortgage<\/a> (HECM) allows homeowners age 62 or older to buy a new home and finance it with a reverse mortgage, all in one transaction. You can receive funds as a lump sum, a line of credit, or monthly payments.<\/p>\n\n\n\n<p>The upside to a reverse mortgage is that you don\u2019t need to make monthly payments. Instead, you repay the loan when you sell or leave the home. The downside is that the interest still accrues in the meantime.<\/p>\n\n\n\n<p>With an HECM, you must sell your current home first. This can be difficult if you can\u2019t afford temporary housing and storage while you hunt for your next home.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"All-in-one_short-term_loan_program\"><\/span><strong>All-in-one short-term loan program<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a convenient alternative for those looking to <a href=\"https:\/\/www.flyhomes.com\/blog\/buying-a-home-before-selling-what-you-need-to-know-first\/\" target=\"_blank\" rel=\"noreferrer noopener\">buy their next home before selling<\/a> their current one.<\/p>\n\n\n\n<p>For example, Flyhomes\u2019 <a href=\"https:\/\/www.flyhomes.com\/buy-before-you-sell\" target=\"_blank\" rel=\"noreferrer noopener\">Buy Before You Sell<\/a> program gives you a short-term loan so you can make a competitive cash offer on a home you love. While you settle into your new place, our team sells your first home at top dollar. Next, we set you up with a long-term loan, or you can choose your own mortgage lender.&nbsp;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.flyhomes.com\/useronboard\/flowform\/?flow=tradeup&amp;utm_source=blog&amp;utm_medium=guide_to_using_home_equity\" class=\"inline-btn-new\">Get started with Flyhomes Buy Before You Sell<\/a><\/p>\n\n\n<figure class=\"wp-block-unsplash-image wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"7318\" data-permalink=\"https:\/\/flyhomes.com\/blog\/3-tips-to-set-offer-price\/cckf4tshauw\/\" data-orig-file=\"https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=2560&amp;h=1707\" data-orig-size=\"2560,1707\" data-comments-opened=\"0\" data-image-meta=\"{&quot;credit&quot;:&quot;Andrew Neel&quot;,&quot;caption&quot;:&quot;Instagram - @andrewtneel | Donations - paypal.me\/AndrewNeel&quot;,&quot;created_timestamp&quot;:&quot;2017-07-11T01:49:32-04:00&quot;,&quot;copyright&quot;:&quot;Andrew Neel&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;MacBook Pro, white ceramic mug,and black smartphone on table&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"\" data-image-description=\"&lt;p&gt;Instagram &#8211; @andrewtneel | Donations &#8211; paypal.me\/AndrewNeel&lt;\/p&gt;\n\" data-image-caption=\"&lt;p&gt;Photo by &lt;a href=&quot;https:\/\/unsplash.com\/@andrewtneel&quot; rel=&quot;nofollow&quot;&gt;Andrew Neel&lt;\/a&gt; on &lt;a href=&quot;https:\/\/unsplash.com\/?utm_source=the-living-room&#038;utm_medium=referral&quot; rel=&quot;nofollow&quot;&gt;Unsplash&lt;\/a&gt; &lt;\/p&gt;\n\" data-medium-file=\"https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=300&amp;h=200\" data-large-file=\"https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1024&amp;h=683\" src=\"https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&#038;ixlib=rb-1.2.1&#038;fm=jpg&#038;q=85&#038;fit=crop&#038;w=1024&#038;h=683\" alt=\"MacBook Pro, white ceramic mug,and black smartphone on table\" class=\"wp-image-7318\" width=\"1024\" height=\"683\" title=\"\" srcset=\"https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=300&amp;h=200 300w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1024&amp;h=682 1024w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=150&amp;h=100 150w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=768&amp;h=512 768w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=1536&amp;h=1024 1536w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=2048&amp;h=1365 2048w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=610&amp;h=406 610w, https:\/\/images.unsplash.com\/photo-1499750310107-5fef28a66643?ixid=MnwxNTIyNDV8MHwxfGFsbHx8fHx8fHx8fDE2MjA5NTExNTM&amp;ixlib=rb-1.2.1&amp;fm=jpg&amp;q=85&amp;fit=crop&amp;w=370&amp;h=246 370w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>The sale of your first home should be able to pay off the home equity loan you used to make a down payment on your next one but it depends on how much equity you actually have<\/figcaption><\/figure>\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Apply_for_a_loan_and_close_on_your_next_home\"><\/span><strong>Apply for a loan and close on your next home<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Your next step is <a href=\"https:\/\/www.flyhomes.com\/blog\/choosing-a-mortgage-lender\/\" target=\"_blank\" rel=\"noreferrer noopener\">choosing a mortgage lender<\/a> (be sure to shop around for the best rates) and beginning the pre-approval process.<\/p>\n\n\n\n<p>Your lender will likely need certain financial documents, typically:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Tax returns from the last two years<\/li>\n\n\n\n<li>W-2 forms from the last two years<\/li>\n\n\n\n<li>Bank statements<\/li>\n\n\n\n<li>Pay stubs<\/li>\n\n\n\n<li>Current mortgage statements<\/li>\n<\/ul>\n\n\n\n<p>Your lender will also look at your <a href=\"https:\/\/www.flyhomes.com\/blog\/what-credit-score-do-i-need-to-buy-a-house\/\" target=\"_blank\" rel=\"noreferrer noopener\">credit score<\/a> and your debt-to-income ratio (DTI). (The ideal credit score for a home equity loan is 620 or higher, and the ideal DTI is 43% or lower.)<\/p>\n\n\n\n<p>If your credit score is low, you may still be able to get a home equity loan, especially if you\u2019ve built up substantial equity over the years. Expect higher interest rates, though.<\/p>\n\n\n\n<p>Next, your lender will schedule a professional home appraisal to see how much your home is worth in today\u2019s market.<\/p>\n\n\n\n<p>After pre-approval, you can begin bidding on homes. Once a seller accepts your offer, you\u2019re ready to move forward and close on the home equity loan. And remember, the FTC\u2019s <a href=\"https:\/\/consumer.ftc.gov\/articles\/buyers-remorse-ftcs-cooling-rule-may-help#what\" target=\"_blank\" rel=\"noreferrer noopener\">Cooling-Off Rule<\/a> lets you safely cancel the loan within three days after closing.<\/p>\n\n\n\n<p>Once you\u2019re ready to move into your new home, you can sell your first property and pay off the home equity loan\u2014or you can rent it out and use the income for loan repayment.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Wrapping_up\"><\/span><strong>Wrapping up<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It may sound complicated, but using your home equity can be a great way to finance your next property purchase. And now that you understand the different types of home equity loans and what to expect during the loan application process, you\u2019re ready to take action!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQ\"><\/span><strong>FAQ<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Is it worth buying a second property with equity?<\/strong><\/p>\n\n\n\n<p>It depends on your goals and your financial situation. If you\u2019re using the equity to buy an investment property, make sure the rental income can cover the loan and all other rental expenses. If you\u2019re purchasing a vacation home, your income should be high enough to pay both mortgages.<\/p>\n\n\n\n<p><strong>How do you use equity as a down payment?<\/strong><\/p>\n\n\n\n<p>You can tap into your home equity with a home equity loan, a HELOC, a cash-out refinance, or a short-term loan program. Each of these options allows you to liquidate a portion of your equity so you can use it for a down payment on your next property.<\/p>\n\n\n\n<p><strong>How do you leverage a house to buy another?<\/strong><\/p>\n\n\n\n<p>If you have enough equity in your home, you can take out a loan against it to buy another house. Once you\u2019ve settled into your new house, you can sell your former one to pay off the home equity loan.<\/p>\n\n\n\n<p><strong>About the author:<\/strong> Jenny Rose Spaudo is a Florida homeowner as well as a freelance journalist, content strategist, and copywriter specializing in real estate, PropTech, and investing. Her clients include Edward Jones, Flyhomes, and PropStream, and her writing regularly appears in publications like <em>Business Insider<\/em> and <em>GOBankingRates<\/em>. <\/p>\n\n\n\n<p><a href=\"https:\/\/calendly.com\/flyhomes-meetings?utm_source=Blog&amp;utm_medium=guide_to_using_home_equity&amp;utm_campaign=bottom\" class=\"inline-btn-new\">Schedule a chat to learn more<\/a><\/p>\n\n\n\n<input type=\"hidden\" id=\"calendly_utm_post_id\" value=\"9229\" \/><input type=\"hidden\" id=\"calendly_utm_post_title\" value=\"A guide to using home equity to buy your next home\" \/>","protected":false},"excerpt":{"rendered":"<p>Even in today\u2019s tough seller\u2019s market, home equity is a powerful tool for buyers. Use this guide to learn how to estimate your home equity and the various ways you can use it to fund your next down payment.<\/p>\n","protected":false},"author":148668397,"featured_media":6605,"comment_status":"closed","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"no","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[655423254],"tags":[],"class_list":["post-9229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-home"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A guide to using home equity to buy your next home - Blog<\/title>\n<meta name=\"description\" content=\"You don\u2019t need to drain your savings account to purchase your next home. 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