@William S. using a LOC can be useful in real estate depending on your objectives. For example, if you are flipping homes, you can use a LOC to buy or to do the repairs, pay the loan back with the proceeds, and do it all over again. However, if you are using it to buy and hold, then using an unsecured loan could cause an issue if you needed permanent financing with a conventional loan. But if you did buy with hard money, used your LOC for the down payment, then refinanced into a conventional loan that would be ok. Using a portfolio loan might not matter but some could have an issue with it. The point here is to really be prequalified first and talk these items with your loan officer so you know how to plan ahead. Thanks!
@William S. using a LOC can be useful in real estate depending on your objectives. For example, if you are flipping homes, you can use a LOC to buy or to do the repairs, pay the loan back with the proceeds, and do it all over again. However, if you are using it to buy and hold, then using an unsecured loan could cause an issue if you needed permanent financing with a conventional loan. But if you did buy with hard money, used your LOC for the down payment, then refinanced into a conventional loan that would be ok. Using a portfolio loan might not matter but some could have an issue with it. The point here is to really be prequalified first and talk these items with your loan officer so you know how to plan ahead. Thanks!
So for buy and hold you can use a LOC for the following:
1. Receive LOC to buy with property cash
2. Receive LOC for a down payment?
3. LOC for rehab
4. LOC for emergency repairs?
I currently set aside a lot of cash for this, but as I am in my growth phase I need all the capital I can get. Once I reach my goal for growth I would no longer utilize this strategy. Can I receive a LOC and only tap into if needed?
@William S. those are all fine as long as you aren't doing #2 with a conventional loan PURCHASE. A conventional loan will not allow you to have your down payment from a LOC...a HELOC is ok since it is secured by real estate but a LOC is not ok. You can certainly use it for a down payment for hard money, then refinance with a conventional. That is ok. Hope that makes sense.
couldn't you get around that by seasoning the funds for few months in your acct? Assuming this doesn't destroy your DTI and prevent you from getting the refi....