I am a looking to buy my first home & would like to take out a second loan at the same time to cover related expenses.?

I am in the market for a mortgage (I want to buy my first house) but would also like to take out a second loan - not sure if it would be an equity loan or personal loan or what it would be called, at the same time to cover moving costs, closing costs, and some other expenses when I first move in. What is the best way to do this?

Take them out at the same time from the same lender (should I mention it to them when applying for a mortgage with them)?

Should I get the second loan first? Through a bank like Citibank? After getting the mortgage?

Should I get the second loan first the apply for a mortgage?

Or is there another process for this entirely?

Sorry looking for some advice as I am not sure what the best way to do this is.

8 Answers

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  • Eva
    Lv 7
    1 month ago
    Favorite Answer

    Don't get the second loan first. You want as little debt as possible showing on your credit report before you apply for your mortgage. Closing costs are usually part of the mortgage. Hold enough cash back from your downpayment and/or use credit cards to pay your moving expenses and other costs. It's unlikely you would be able to get a second loan so close to getting your mortgage.

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    • A.J.
      Lv 7
      1 month agoReport

      Unless this is an unspecified non-USA where high risk loans are common, it cannot be done. Questioner is simply not ready to buy a home. Not enough cash in hand.

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  • LILL
    Lv 7
    1 month ago

    Lenders want to see that you are capable of saving for the down payment and closing costs on your own.  It is also unlikely that you would have any equity in the home at closing or after closing.

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  • Anonymous
    1 month ago

    You can't afford to be a homeowner if you need to borrow the money for your closing costs, moving expenses and other expenses.

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  • A.J.
    Lv 7
    1 month ago

    I don't know what country you are in, but in the USA, you are describing some of the risky loans in 2008 that lead to the banking collapse, and nearly crashed the economy.

    To buy a home, other than a special military veterans loan, you need a down payment of equity. The piggy back loans are extremely rare because of high risk and they are high interest.

    Any loan before buying a home generally lowers your credit score and reduces the amount you can borrow  based on income.

    What collateral for a loan?

    You can't get a loan while buying, nor cash in purchase unless the home is appraised much higher than your purchase price, and this will apply after as a second mortgage.

    If you have a decent amount for down payment, after close of the house transaction then you have to dig around for a high interest loan against the down payment equity.

    I sense in the question you are not even close to being ready to buy a home.

    You know nothing about the financial process of it.

    Banks should mostly brush you off quickly and some would attempt to explain what it takes to buy a home.

    Typically,

    FHA loan is 620+ credit score and 3.5% down payment plus buyer's closing costs.

    PITIH = Principal + Interest + property taxes + Home insurance + Homeowner's association fees not to exceed 33% of gross income

    PITIH + outstanding monthly loan payments including credit card debt, student, car loan, and all other loans and debt payments not to exceed 39% of gross income.

    Buyers closing costs include inspections, appraisals, documentation fees, credit check and application fees, prepaid home insurance 1 year typical and prepaid property taxes two months typical unless annual payment due soon.

    Then, you need your moving costs and any lease break fees of renting.

     

    $150,000 home typical FHA 30 year

    $5250 cash down payment minimum +$2000 closing cost cash means no less that $7250 cash available

    144,750 loan 4.808% apr today, plan at 4.9% at best in case of rise.

    http://bretwhissel.net/amortization/amortize.html

    768.23 P+I, $156.25 property tax at 1.25% annual, $50 home insurance at $600/year, $30 HOA,  $1004.48/mo PITIH

    $36161 minimum gross earnings if monthly other loans do not exceed $181/month.

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    • A.J.
      Lv 7
      1 month agoReport

      Piggy back loans made no money down or immediate negative amortization. No equity in homes, that fell in value. Number of factors.

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  • Murzy
    Lv 7
    1 month ago

    Not a good idea as it will affect your ratios and you may not qualify for the mortgage.

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  • 1 month ago

    You're supposed to have this money saved (for closing costs, moving expenses, etc).  That you don't is likely to tell your primary lender that you're no way prepared to buy a home.  

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  • 1 month ago

    not a chance...might as well just shred your money and find an alley to live in....when you default on the loans..not even allowed to use a loan for down payment/closing costs...although some mortgages will include some closing costs.

    to get an equity loan, you need equity....and with 20% or less equity, you are not getting an equity loan.  if the home is 100K, you put 5K down, you only have 5% equity.  if you put 20K down, you have 20% equity at the moment of sale.

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    • SimplytheFACTS
      Lv 7
      1 month agoReport

      try explaining yourself..OP wants to spend money they don't have...if they could afford it, they wouldnt need a 2nd loan.

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  • 1 month ago

    i would talk to your bank about it

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