I currently have about $40K in equity in my own home, as well as about $15K in cash equivilants. I think I ‘m ready to buy my first investment property and I plan on getting a HELOC secured by my home to help make the downpayment on the investment property. My question is whether I should take out the HELOC ahead of time to help me qualify for the mortgage (show more cash) on the invesment property or should I take them out at the same time with one lender? Any ideas? Is one scenario more attractive to lenders or does it matter.
I can’t see any advantage in taking it beforehand. I would appreciate any insights by anyone else on this.
I would take it all at once with the same lender. It will certainly be more attractive to that lender to do the whole deal.
cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985When you apply for another loan the total amount available to you on your LOC is counted (whether or not you have used it).
So there is a subtle difference. You would be, in effect doubling up on the borrowings amount of $40,000 ( in their calculations) if you asked the second lender for that amount of money.
However if your borrowing capacity can stand it then many borrowers take that and save their LOC for later.
Also: I have been advised not to cross colateralise.Just my thoughts
SallyrI guess my concern is that if I don’t get the HELOC first, that when I go to a lender, they may shy away of lending out more than 80% of the value of the new investment property. I guess I should remember that the HELOC is secured by my current home, so perhaps that is not an issue. But would it be simpler to negotiate the terms of the mortgage once I have say $40,000 in cash from HELOC as opposed to trying to negotiate on a HELOC and Mortgage package?
Another way to put it is that I am wondering if I have more negotiating power dealing with the two loans separately. Kind of like how you can generally do better buying a car when you don’t include the trade in as part of the transaction. Shop the HELOC and Mortgage separately. Any opinions?
I can’t see the advantage gained. Find yourself a broker who can research and negotiate on your behalf. Here in Australia most don’t charge for their time and I guess it is the same in the US.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985I have recently brought an investment property using the equity in my home so that all i had to come up with was the $1000 deposit for the agent. The only flaw against having your home tied in with your investment property is if you fail payments on either property the bank can take both properties from you to get back what they are owed. (this is my understanding of it.)
I have recently brought an investment property using the equity in my home so that all i had to come up with was the $1000 deposit for the agent. The only flaw against having your home tied in with your investment property is if you fail payments on either property the bank can take both properties from you to get back what they are owed. (this is my understanding of it.)
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