Getting started options

[Tim Marshall]

I am hoping to get our second rental property in the spring and am looking at options for financing in CT. I only have about 10,000 liquid but 100,000 in equity in my primary residence and 70,000 equity in our rental property. I am not sure if that equity is best used as a refi or heloc in buying our next rental or should I forgo both for traditional financing and hope to save the 25 percent or so first? What are everyones' thoughts here?

[Jerry Padilla]

@Tim Marshall 

For your rental you can cash out refinance at an LTV of 75% for a single family and 70% LTV for a multi-family. If you can increase your cash flow overall it can be a great idea.

For your primary, I would compare the rate of your current mortgage versus the rate you will get with the cash out refinance. It is great to utilize your homes equity to start investing, but if your rate will go up drastically than I would look into the HELOC. The issue with a HELOC is the rate is adjustable.

[Tim Marshall]

@Jerry Padilla

Thank you jerry that’s great info