Line of credit? Is it worth it?

3 Replies

My mortgage guy keeps pushing a line of credit on me. I'm not too familiar with the product and not sure if it's worth it. He says it's easier to buy properties and quicker to close. Then I can refinance to a different loan later. Any thoughts on this?

A line of credit in my case allows me to make "cash" purchases and the ability to close in 10-12 days.  Then I refinance with my bank into a commercial loan.  Many people will not accept an offer where I invest unless it is cash.

Hope this helps.

A line of credit does enable you to have cash. I use a HELOC I have on a rental to purchase cash properties, which makes buying a lot easier. However, I personally won't take out a HELOC on my primary residence because I don't want to risk it. I'm only willing to risk business assets for business purchases. But that's my own risk tolerance - everyone has their own tolerance.

I wouldn't be where im at without one. As long as the investment you make with it is strong enough, it is no more risky than taking out any other loan.

Need to have an exit plan, though. The line of credit WAS on my primary, but I have since bought more and turned that into an investment property. The interest only payment is factored into the equation, and I still have positive cash flow. I have enough equity in the property where I could refinance for a slightly higher rate if I absolutely have to get out of the HELOC.

Im pro-leverage (at the moment), but I also have a higher risk tolerance than others. You only live once.