Analysis using a Home Equity

[Matthew Spaulding]

Hi everyone, I’m very new to all of this and looking to get a basic understanding deal analysis.  I’m currently using the BP analysis tool and had two questions on the down payment portion.  I’m planning to use home equity to fund my first deal.

1. My first thought was to simply pay for a property in entirety using my equity.  Where I’m confused is I can’t simply select “cash payment” because the analysis looks like I don’t have any mortgage payment (I have a 4.85% interest on my equity loan).  Do I just manipulate the percentage down so it closely matches what my loan payment will be, call it good and move on?

2.  In talking with someone regarding above, they mentioned that instead of tying the money up in one property, I could use it as a down payment on 2 (or more in theory).  Again, I’m a bit confused on how I would analyze this.  Let’s assume a 20% down on a $100,000 property.  Now I’ve paid $20,000 at 4.85% and will use a conventional 30 year loan for the remaining $80,000 at 6.5%.  How would I analyze this, and does this even make sense considering I’ll be paying two loans and more than double the interest rate?

Any guidance would be appreciated!