HELOC to buy studio in Paris

[Marc Dufour]

I am thinking on buying a studio in Paris with a HELOC of $300K I have on my primary residence in the US. I would then rent the studio in Paris to have a positive cash flow. - If I use all the $300K HELOC, how much would be my monthly payment with a 4% rate? (I am not sure if HELOC are for 10, 20 years?) - Anyone has experience on using HELOC vs regular loan? Pros and cons?

[Steve Babiak]

First, you have to get the HELOC before you can go on a buying spree.

And the terms for these from various lenders do vary in many ways. Some have a draw period that is interest only, while others have principal and interest both being paid in the draw period. Some tie the variable interest rate to Treasury, while others tie the rate to LIBOR. Then there is the variable about the margin above those rate standards. Then you have to be concerned about the max CLTV that the lenders will allow for the loan. And to figure out how big of a loan amount the lender will do, the CLTV is really important. I have previously posted example HELOC calculations showing how CLTV and equity set that loan amount, so do some searching.