You replace your current mortgage with a brand-new, larger one . You pay off the old loan and keep the extra cash for your next purchase. This is most attractive when current interest rates are lower than the rate on your existing mortgage. 3. The Strategy: Making Your Money Work Once you have the cash, you have two primary paths:
You keep your first home, turn it into a rental property to cover its own mortgage, and use the equity cash to buy your new primary residence. how to use equity in your home to buy another
You are now responsible for two loans. If the rental market dips or you lose your income, both properties are at risk. You replace your current mortgage with a brand-new,
You stay in your current home and use the equity to buy an investment property . The goal here is "positive cash flow"—where the rent from the new place covers the new mortgage plus the cost of the equity loan you took out. 4. The "Check Engine" Light: Risks to Consider If the rental market dips or you lose