Hi All, have been ardently reading BP forums, listening to podcasts and webinars and think I am ready to take the plunge into investing in a rental property. Where I need advice is - my primary home is fully paid up so I have a good amount of equity, should I pay for the rental property completely using my home equity or should I only take the down payment from the home equity and get a mortgage on the rental? Getting a mortgage means I have to pay significantly more in closing costs while getting a HE loan is basically free. It seems like a no brainer but want to learn from the pro's on BP what the best way to go is?
Hello and welcome to this site Vinog! You are going to love hearing an answer like this one. You should go with is the lowest cost lender. This means your kind of loan and use them means you must shop around and be a successful borrower and you show that you are responsible to pay it back as fast as you can and/or make those minimum amounts on-time. It might be a HELOC card or a home equity deal but get whatever loan you get you understand the terms and fully aware of any negative. Make whatever choice you make feel like it is the best for you and you are happy with your choice whether or not the type of loan you make and how that is in line with your goals. It may be for a down payment or a full loan. Just go with the type of loan you feel comfortable with. Good luck to you!
Hi Mike, thanks for your reply. I agree that the lowest cost option makes the most sense to me. Though I also believe there can be some creative ways to leverage your home equity to buy multiple properties and am hoping some of the others can post on this.