HML Or Personal Credit Line?
Okay, I am about to close on a property and I have two options for financing the second on the purchase price. I could use available credit lines or I could use a HML who is offering a rate that is 3.5 times what I would get on my current credit lines.
The advantage of the HML is that they would not report to my credit and would be “under the radar” so to speak if I try to finance other deals. They have also agreed to hold the deed of trust and not file it for 6 months I have worked with them before). Also, it would be easier to pay off when I try to refi to a better rate down the line because it would then be a deed against the property.
The credit line is a personal one and would not have any deed against the property. My broker says it is always more difficult to do a cash out refi for a non owner occupied so it would be harder to pay off the personal line when I refi the investment property down the line.
I was just wondering what opinions others had out there. How would you approach this situation and what do you see as the pros and cons of either approach?
Thanks.
JS.
You would save a lot of money using LOC, instead of HML, right?
As long as you can use those lines of credit - I would definitely do that!
Good Luck!
[addsig]
Thanks mattfish.
Any others?
JS
If you have the Line of credit - use it and you will make more of a profit!!
[addsig]
i have personally used my equity line over time for 4 investment properties. i have waited a year and then put a mortgage on them to try for another its working so far. my rate is about 6% at this point
john
Question: If one uses an equity line or other credit line (say credit cards etc) that do not have a deed on the subject property, how do you cash out the money down the line? My difficulty is figuring out a way to refinance and pay off the credit lines using an investment property. I have been led to believe that it is almost impossible to do a cash out on an NOO property.
Thanks.
JS.
I have found that local banks are friendly toward NOO properties. However most may require at least 20% in equity. Call around.
Definitely call some lenders (since they are actually in the business of giving loans). Lenders look at risk and leverage. If banks did not lend on NOO properties, the rental portion of this business would not make much sense. As long as you can cover the loan, you can find someone to lend you the money on the property.
But I reiterate, call some lenders and get an idea of their programs.
If this is your first deal, I would not mess with it. Sounds like you have a foundation problem (foundation problems are never good). I don’t know what you are buying it for, but if you fix the foundation, you really do not get any return on that cost. People expect to have level floors, therefore by you fixing the floor, there is not added benefit.
Regardless, this sounds expensive. I would call around to some local foundation experts or property inspectors and try to pick their brain as to how much something like this could cost.