Borrowing Against My House

[Matt Hulsman]

Hi everyone! I wanted to start a thread on borrowing against my house. I have a home in Portland, OR that has about (just guessing) 75-100K in equity. I'm looking at buying a 150-200K condo in Scottsdale, AZ with a good friend as we both are in AZ frequently. 

If I wanted to use a Home Equity Line of Credit, etc. would that go just for the down payment on the property or would I need to cover my entire half of the investment? I'm a self starter and looking to use my equity to get a few rental properties and need some strategic help to maximize and invest my equity. 

Thanks! 

[Matthew Dennehy]

The nice thing about the line of credit, as others have mentioned, is you can use the money as you need it and aren’t forced to take it lump sum like a home equity loan. So you can pay for your half of the deposit, any repairs, have a nice reserve, and etc.

Just keep in mind that even though you get approved for the HELOC, you still have to get approved for the loan on the investment property. Make sure to talk with your lender (the one for the investment property) about your pre-approval, and sourcing your down payment from the HELOC, first, before getting the HELOC. You don't want to get in a situation where you exceed the debt to income ratio. Also, some lenders might have an issue with you sourcing a down payment from debt. So just make sure to ask up front.