I’m looking at buying a triplex to rent out to students. I was able to get 100% financing, however the rates are crazy high (i.e. 9.5-10.5%). I’m thrilled that I won’t need to put any money down, but now the numbers don’t work.
I just received a line of credit from my bank a few weeks ago (because I am getting into the investmnet real estate game, and I figured that I would need it), and I can fix the line of credit at 7.4%…basically turn it into a home equity loan.
I am wondering…has anyone ever purchased a house with their line of credit. I believe that some rule states that you can’t do it. However, if I were to do it, it might make sense. I would use the line of credit to put down 20% of the purchase price, which would get me down to respectable interest rate levels, and avoid PMI. The montly mortgage payment for the house PLUS the equity loan would be way less than the payment I would have had with 100% financing, because of the high interest rate. It would still be no money down, but in a different way, since I would be using my line of credit for the down payment.
Please give me some insight if you have any.