Financing advice for a newbie!!!!

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Hello BPers,

I'm a newbie, planning on buying my first SFR in the next 4 months. I'm working on the financing with my bank and I already have my eyes on a property.

Here are the financing options offered by my bank:

1. cash out refi. I have about 100k equity on my house and my bank is offering to refinance the house, apr 3.75% on 15 years or 4.75% on 30 years and give me 60k in cash. Now my mortgage is a 15 year at 3.5%. I read that cash out refi is only worth it if the interest offered is lower than the original one.

do you think I should accept this option, considering that i also have to pay the refi fees? I'm inclined to say Nay!!!

2. They also want to offer me a HELOC with a 100k limit. I dont know the other details yet. we'll talk about it tomorrow.

3. They plan on giving me an unsecured LOC with 80k limit.

4. Last and more importantly, they are offering up to 4 residential type mortgages at less than 4% interest rate for 30 years.

My request to the banker was very specific: I want financing options with almost 100% financing. This is what she offered. What do you think? How would you proceed if you were me.

I'd like to buy my first property before the end of the year and have 4 properties in thenext 12 months.

My plan is to use the cashout, HELOC and LOC as down payments for the conventional mortgages to buy my first 4 rentals and use none of my cash.

what do you think about this financing strategy? It it something you would do?

Thank you

[Kyle McCorkel]

Erick D.
I think it might be worth it for you to do the cash out refi. But do it with a 30 year amortization, not your current 15. It might even lower your payment PLUS get you cash out (keyword: MIGHT)

The other option would be to keep your current mortgage in place and get a HELOC to tap into your extra equity. HELOCS are great - you don't pay until you use it, and they are typically low or no fees. You can pay it off and reuse it as many times as you want.