Financing purchase with credit card

[James Conaway]

Between myself and my wife we have about $200k in credit card credit. Our credit card debt is about $2k right now.

I have been building up credit lines for a long time in anticipation of being able to do something with this capital opportunity.

I would like to finance purchasing a property using credit cards for as a short term interim way to quickly close on a deal. The property price would be a maximum of $70-80k. The property needs some renovation and wouldn't qualify for a traditional loan.

The plan would include repairing the property up to the point I can do a cash out refinance of up to 75-80% of the property within 3 months. The other 20-25% would be my personal cash.

Yes, I would have to pay interest on the money, but its manageable. The rates I have are very good.

The question I have is:

Would a escrow company accept credit card checks for deposit into the escrow account for purchasing the property?

I have done my own research into this and have found many instances of people saying it's a bad idea because of the lender having a big problem with it, but this is a all cash purchase with no lender involved.

I have checked with a few credit card companies and they stated they don't care what you use the checks for.

I see the benefit of doing this is avoiding the use of a hard money lender and their heavy fees. I become my own hard money lender.

Risks:

When it comes to do the cash out refinance my DTI would be a factor, but assume that wouldn't be an issue. I have a good income and no other debt. I would run the numbers to make sure I could still qualify for a cash out with an acceptable DTI 30-35%.

FICO score. I would be the one financing the cash out, so most of the debt burden would be on my wifes cards, which I would not be factor as she wouldn't be on the loan.

[Dan Marriggi]

I've used this creative and risky technique at least twice. Its a terrific way to use other peoples money as a bridge until you can free up more tradition lines of cash.

A few thoughts: 

Do not take the money until absolutely necessary - the clock starts ticking as soon as you take it

Deposit the checks into your checking account and then write a check for the property - there is no lender since you are paying cash

Refinance will require you holding the property longer than 3 months. Most likely 6 - 12 months for "seasoning" Depending on the bank etc.

Make sure your math is spot on. Know the ARV and if this is an investment property, you may only be able to refi for 70% loan to value

Refinancing process can take a long time - 2 or 3 months in some cases. Make sure you don't run out of time and have a back up plan in place