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Posted by al on April 7, 2008, 5:25 am
Hi all,
I have about $250,000 Home Equity Line of Credit from my current home.
If I want to invest and buy let's say a condo for $250,000.
Would it be better for me to get the money from my HELOC and pay off the
condo or get a loan from a lender?
Is one better than the other? which one has lower interest rate?
I am in Southern California.
Please advice.
Thanks in advance,
Al
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Posted by John A. Weeks III on April 7, 2008, 7:45 am
> I have about $250,000 Home Equity Line of Credit from my current home.
> If I want to invest and buy let's say a condo for $250,000.
> Would it be better for me to get the money from my HELOC and pay off the
> condo or get a loan from a lender?
> Is one better than the other? which one has lower interest rate?
If either of the loans have variable rate, then you have more risk.
The H/E loan may be tax deductable, where as a loan for investment
property may not be. You need to look into the details. Do you
plan to buy more real estate? If so, be aware that banks will
cut you off after the 3rd or 4th or 5th loan. Using your H/E
loan allows you to buy a property without a new loan. Later,
you can look at a 3rd property, and you have a paid-for 2nd
property to borrow on. You will find it easier to get that
3rd, 4th, and 5th property. Again, if the condo is bought
to flip, it will be easier to sell since you will not have a
loan on it that has to be taken care of at closing.
-john-
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John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
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Posted by Elle on April 7, 2008, 12:50 pm
> I have about $250,000 Home Equity Line of Credit from my
> current home.
> If I want to invest and buy let's say a condo for
> $250,000.
> Would it be better for me to get the money from my HELOC
> and pay off the
> condo or get a loan from a lender?
> Is one better than the other? which one has lower interest
> rate?
What John said. Importantly, also note that the IRS among
other things limits the total (that is, on first and second
homes) home equity debt (for which the interest is permitted
to be deductible) to $100k. See
http://www.irs.gov/taxtopics/tc505.html
It's a funny time for investing in real estate. The flipping
mentality is a bad one to have, right up there with other
get rich quick schemes, IMO. So I hope you're prepared to
own this condo for awhile, worst case.
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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Posted by HW \"Skip\" Weldon on April 7, 2008, 12:50 pm
wrote:
>Hi all,
>I have about $250,000 Home Equity Line of Credit from my current home.
>If I want to invest and buy let's say a condo for $250,000.
----------------------------------------------------------
***FROM THE MODERATORS:
We erred in posting the above. It was cross posted and got by us.
For those who wish to respond to this thread on this newsgroup, please
insure that you are only posting to misc.invest.financial-plan. Sorry
for our mistake.
-HW "Skip" Weldon
Columbia, SC
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
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