HELOC for cash purchase: Exit strategies?

Question

Has anyone used a HELOC to make an 'all cash' purchase on a property?  I think an 'all cash' purchase can often give you a better deal, but the last thing I want is to have a house on a variable rate given interest rates are so low,

What were your exit strategies?

Were you able to get a 30-year mortgage on the already purchased home?  I don't know how that would work...  Thanks!

John Kuzan · Answer

I used my Home Equity Line of Credit twice to purchase a buy and hold.  After rehabbing and having income from the property, about a year, I was able to pull a 15yr conventional mortgage on the that property.  The rental income/signed lease help to increase my debit to income level to secure the new mortgage.  I was able to borrow 70% of market value which about covered the initial amount borrowed from my HELOC.  Then I did it again.

John Kuzan · Answer

@Zach Liu

I am going to be at that point shortly, where I want to pick up another property but my debt to income won't qualify.  That is how I came across BP, looking how to get to that next level.  It seems portfolio lending may be an option for you, if you are already holding several mortgages.  I am just in the beginning stages of figuring out portfolio lending, plenty of posts to read on BP.  Have you try this route yet?

Zach Liu · Answer

@John Kuzan

That's the way I have been thinking recently. But when I tried to apply for HELOC, I got turned down because of debt to income is too high. The problem is I bought two properties last year and this year, but they have too short periods for the bank to count them as income source. Need to find a way to work around it for sure.

Blair Poelman · Answer

using a HELOC is common.  It's a popular way to fund the purchase of an investment property.

Getting a cash-out 30 yr mortgage to repay (refinance) your HELOC can be somewhat of a challenge. I've not seen that to be common, but I have seen it done a few times.

exit strategies are all over the board.

HELOC for cash purchase: Exit strategies?

Most Popular Reply