Specialist · CO · Member since 2020 · 8 posts · 6 votes
Hi all! Newbie here. I was chatting with my mom a few weeks ago about an area for potential growth where homes are currently under the $50k mark — a.k.a., an area that's ripe for a newcomer like me to invest.
I could definitely afford a 20% down payment on a few of these homes, so traditional financing is not an issue; but my mom (a banker herself), mentioned how I could purchase some of the lower-cost homes with a credit card. Apparently this is a thing?
I know that BP is all about creative ways to finance, but does anyone have direct experience with home purchases on a credit card? Or other creative ways to finance? What are the benefits of buying with a credit card/non-traditional method of financing vs. putting the 20% down? Anything you wish you had known prior?
Yes, I've used this before. The great thing about the credit cards (especially business credit cards), is that you can use the 0% interest cards that only require you to pay about 1-2 % of the balance until you pay it off. So not only would you be using bank money, but 0% bank money to fund your deals. It's pretty sweet if you know how to do it.
Like any purchase with a credit card, you'll be obligated to pay the interest if you don't pay that amount back by the end of the month. I could however see the benefit of using a credit card if you were planning to pay it off right away or you were looking to flip the property and didn't have the cash up front. Was this helpful?
Yes, I've used this before. The great thing about the credit cards (especially business credit cards), is that you can use the 0% interest cards that only require you to pay about 1-2 % of the balance until you pay it off. So not only would you be using bank money, but 0% bank money to fund your deals. It's pretty sweet if you know how to do it.
You could also use a personal loan like from SoFi or Lending Club. The combination of this and CC's might get you a down payment and more.
Yeah, that can help too. The only downsides are that it negatively effects your DTI and you are paying on the loan if you are using the $$ or not (vs a line of credit).
That’s true, but there are ways to mitigate that. You can work with a lender or mortgage broker before the purchase to see if you the refi would go through with theoretical numbers or from my understanding a good lender/broker during the refi will not include the personal loan as long as it gets paid back immediately from the refi.
Interesting. I guess it would be similar to like a debt consolidation loan in that case, where they factor in the fact that the loan would be gone after financing.