As a first time home buyers can I consolidate my debt using the remaining money from my home loan?

Question by lilly_belle82: As a first time home buyers can I consolidate my debt using the remaining money from my home loan?
I am planning on buying a house soon, and the value of the house is less then the loan amount for which I have been approved. I want to know if I can take that remaining money and use it to pay off my outstanding debt. (credit cards, car loans etc.) Essentially consolidating my debt into one payment.

Best answer:

Answer by Landlord
You can not have a higher mortgage then the sales amount, the appraised amount means nothing.

Know better? Leave your own answer in the comments!

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  1. sarah W says:

    nope you may be approved for more but its a use it or lose it situation. you will only be given what your house cost

  2. FaZizzle says:

    I wouldn’t recommend it.

    When you are approved for a loan, they are saying that you are approved up to a certain amount. Let’s say you were approved up to $ 150K.

    That doesn’t mean you are entitled to the entire loan. That means that the loan agent has calculated that you can afford the mortgage and insurance for that amount.

    Loan agencies don’t like being used for personal loans unless it’s a special loan just for that purpose.

    And you’re forgetting that just because you pay off one debt doesn’t mean that you’re out of debt because you took out a loan. It’s just putting you in more debt.

    When you sign the papers at closing, you are signing for the amount of the loan for the HOUSE. This is a first time home BUYER mortgage, not for personal loans.

  3. DJ B says:

    Lilly, the houses value needs to higher than what you actually pay for it to have any equity when you close. If that is the case, you need to discuss with your lenders the best options for a loan that could provide you with the cash to pay off your credit cards.

  4. Hope I Can Help :-) says:

    My boyfriend and I just bought out 1st house in April. They will only allow to take the loan in amount of the value of the house. You cannot take extra if your house isn’t worth it. We were able to include all of our closing costs in our mortgage. We put 0 (zero) down, paid $ 242K and took out a mortgage for $ 250K, since the bank said that was the value. Luckily, we ended up with just $ 100 in our pockets in the end. Cosing Cost and inspections can be more than you expect. Good luck!

  5. linkus86 says:

    No. Think about it for a second … the home loan is secured on the the home, thus they aren’t going to lend you more money than the house is worth. But, if you can get an unscrupulous appraiser (they are out there) to value your house for more than its actual value after the sale, you could get a second mortgage or a HELOC to pay off those other debts and write off the interest too.

  6. pearlmel says:

    no never!
    you can reifnance and consolidate but not buy a home and get extra money out.

  7. dramboldt says:

    On a loan that is sold to Fannie Mae of Freddie Mac, your loan amount will be sales price or appraised value whatever is lower.

    Beware of taking a loan that gives you more than what the house is worth. If you owe more on the home than the market will pay for it and something happens, you will have great difficulty selling. Most likely it would end up in foreclosure. Your lender should go over all that as well. If they are not, I’d look at a lender that will answer your questions.

  8. Whats my Name says:

    You post your profile on this webiste and then lenders come to you. I recommend trying

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