Pay Cash and Refi Wtih Credit Union? Better Than Conv. Mortgage?

[William Coet]

I just discovered that our local credit union does home equity loans, and am considering the benefits of paying cash and then doing a refi with them.  Although the rate is higher than a conventional mortgage, it requires less up front cost than getting a conventional mortgage with 20% down payment, appraisal fees and loan origination fees.

Some Details: They will do up to 90% LTV for 20 years at 5.24% with a curbside appraisal only and no closing costs to borrower.

Please don't hesitate to correct me if I'm wrong, but after a cash purchase and refi you will have more cash on hand than if a conventional mortgage were used, and this is good for continuing to purchase more properties.

Other than a higher interest rate, What are the drawbacks to this technique?

Thanks