Hi guys, been a few years since I last posted I recently bought a rental investment property for 250k with all cash, it’s rented for $2000 a month minus $1000(tax+condo fees) for a net $1000 income.
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Is the approval process easier for home equity loan than a regular mortgage? Lets assume the appraisal value is 250k or higher, do the lenders care about your income/debt ratio, ask about every single line on your bank statement etc… like a regular mortgage. Or do they dont care as long as the appraisal is good and you are doing <80%.
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Since the rates are low, and there are many good valued properties, i want to take out a home equity loan for the max amount (80% of appraisal) on the rental, then use that money to buy a second rental. Basically leverage it up.
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If I have a home equity loan on a rental, i understand the interest on the home equity loan is not deductible while a mortgage is? How does that make any sense. Lets say I make $1000 net rental income, if i have a $1000 monthly mortgage interest, my $1000 rental income will not be taxed. Yet if I have a $1000 monthly equity loan interest, i will be taxed the full amount for the $1000 income. Makes no sense! is there any legal way around this?
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Are there any other methods/loan types to take out a loan on my rental investment to be used elsewhere.
Thanks!