Hi,
I’m looking to purchase an additional property (an income producing multi family) within the next year using the equity in my home as a downpayment. I’ve heard a little about it from this website and understand it works like this:
- Get a HELOC on your house
- Write a check to yourself for the amount you believe you will need to put down for the new property
- Put the check in the bank and let the money get “seasoned”
- When comes time to put money down at closing you can write the check from your own personal bank account
My 2 questions are…
-
Is this actually legitimate or could it be considered fraud since you are hiding the fact that it’s not really your money but merely a loan on your primary residence.
-
Isn’t the % of Home Equity loans (like in the ballpark of 18%) so high that your payments your primary residence would increase so dramatically that you couldn’t afford now to make both payments?
If so can I assume I would be able to refinance on the primary residence immediately after closing?
If any investors, mortgage brokers, or whoever has any answers/advice I would greatly appreciate it.
Thank you