Hey all,
I keep receiving mail from my mortgage lender saying I may qualify for a home equity line of credit up to $40,344. I and my wife just moved into the house in the middle of October. I would like to invest into another property, but is it wise to call my mortgage lender to see how much we can qualify for and use the money even though we haven’t lived in the house that long.
It all depends on the whole picture. There are many unanswered questions that come to mind here…
like,
Can you afford to carry a second home / investment home if you have no renter in the home?
If you can, then go for it! Get an application with a professional mortgage broker.
There are 100% options on Non Owner Occupied Investment Purchase Programs offering no money down, or if you want a better rate, put 5% down or have a seller carry a second at 10% and get an even better rate.
Have you found a property for your investment purchase? Does it sit in a favorable rental market? Meaning, is there a positive cash flow coming from the property?
You should do some more research on figuring out how to get the return on your money that you put into the property… If you cash out $40k as a line of equity and purchase a property that allows you to sell and make a decent profit, then yes it may be well worth it to take out some money and buy… but be careful… there are many pitfalls that come with investment properties and the surrounding business…
Best of luck to you.
Remember,
When you put a second against your primary residence and you can’t, for some reason, pay the note, they take YOUR house (the loan collateral!)…
Keith
My plan was buy an rental property to help offset our current house mortgage. we both have above 800 credit scores. This being our first house, I’m kinda new to this whole equity thing. How is it possible that my lender would give a equity line of credit up to 40K are they using my house as collateral for the credit line. Would it be wise or possible to get 100% financing including the down payment and closing cost rolled in for the investment property instead of using the equity line of credit from an hard money lender or bank
Thanks for the info,
be real careful. finding a rental property that actaully produces cash can be very difficult depending on what area of the country you are in.
rental income>mortgage payment does not measn you are making cash to help pay for your own home mortage. You need figure in insurance, taxes, management fee, repairs, vacancy (no cash coming) as well as serviing the debt you take out for the downpayment. Also you need to have some reserve money in case the hot water heater goes out or other major repair crops up (either with your residence or the rental). 
No trying to scare you off, but do your homework and make sure the financials will work out.
here is something someone told me, single families dont typically cash flow. you are taking out a HeLoc(home equity line of credit) to purchase a rental. you hope the money off the rental will pay for the mortgage on your primary residence. what happens if your tenants load up a pick up truck in the middle of the night and hightail it out of your property owing you 2-3 months back rent. or when they have taken the toilet with them. then you are in a situation where you are putting your primary at risk. there are other ways to invest and make cashflow and build wealth.
Is it possible to get 100% financing from a broker, instead of using a equity line credit for a downpayment. Me and my wife both 800+ credit scores. Where are these lenders and what type of requirements would I need.
absolutley, you need to get an application with a mortgage broker you feel will help you the most.
if your credit is not a problem, then getting money will certainly not be a problem.
those letters are mass mailers. I keep getting the same letters that say I qualify for 70,000. The only problem is, that is the amount of my second mortgage. (i used 100% financing). These letters take the mortgage amount on file and the county appraised value and send you that letter.
As far as investing, make sure you can afford all the payments of these loans even if you don’t get paid rent, or you neg cashflow, etc. You don’t want any late payments or even foreclosure on your record.