HELOC

[Carlo Torres]

hey guys just wanted to know if this was a good idea. I own a home with equity and am able to get a HELOC for 150k first year fixed rate. I Have a multi family house I been looking at for 109k. Would it be a good idea to buy the house and after a year refinance that way the house I own is not at risk. Also if this works would I need a down payment when refinancing? Thanks in advance

[Jacob Blackett]

Hey Carlo, there are definite advantages to closing with cash, and then refinancing once you own the property. The biggest advantage is the ease and quickness of the transaction when you purchase it. 

You'll have to shop lenders, but I know many banks will refinance before the 1 year mark- you'll just have to call around. When you get a refinance, there's no money down you have to come up with. Lenders will give you a refinance based on the Market Value of the property. So if the value is $150,000 and your lender says they will refinance it 70% LTV, that means they will give you a check for maximum $105,000 (70% of $150k). The result will be $105k in your pocket (less any closing costs, fees, etc) and a loan on your property for $105k.

Happy to help with any other aspects! Jake