I am 1/4 owner of a property that is paid off and was wondering about a heloc and if it was possible to take out some equity to pay off some debt?
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I am 1/4 owner of a property that is paid off and was wondering about a heloc and if it was possible to take out some equity to pay off some debt?
Asked on May 26, 2009 under Real Estate Law, Alabama
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
In theory whether you hold as tenants in common or joint tenancy you can encumber your share of the property. However, as a practical matter, the creditor would want to be secured by the entire property, not just your 1/ 4 share.
In this economy it's hard enough to obtain traditional financing, I can't imagine doing something along the lines that you are suggesting. Then again, you didn't give any particulars about the property. If its got some extreme or unique value, I guess its possible.
J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
The first thing you need to do is discuss your plan of action with the other owner(s) as to you intention to encumber the property. You should speak to a mortgage broker to find out all the different ways to take money out of the property. While HELOC may be done, there may be some better alternatives out there depending on your situation, which i do not know much about. Now is a great time to get a home equity loan, but you should make sure you are getting the best rate and that the other owners are aware of it.
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