Financing Options - Conventional vs. HEIL or HELOC

[Kevin Brandner]

Hello,

My wife and I are currently searching for our first investment property, hoping to find a small multi-family in the Cincinnati area.  We have a great real estate agent and are going through the pre-approval process for loans now so we are ready when we find the right property.  

Sine we own our primary residence one of the banks we contacted suggested we use a home equity installment loan (HEIL) saying that it would allow us to make what amounts to a cash offer on the property and secure the loan with a similar term and interest rate to a conventional loan and the added benefits of no closing costs.  

We've done plenty of research before beginning this journey and have read about various financing options. Most of the time books mention HELOC's or conventional loans before moving on to other more exotic financing options but this is the first time I've run into a HEIL option.

Since we have additional cash to put the required down payment on a conventional loan I'm inclined to go that way and avoid collatoralizing our primary residence but can someone help me understand the key differences between HELOC and HEIL and why I might be wrong in choosing a conventional loan over the existing equity options?

Thanks!