All Forum Posts by: Tom Horn

@Justin Hoggatt That's great info; thanks for the feedback. I understand I could go after something bigger (like a 4-plex), but with this being my first investment property purchase, I want to play it safe and just get a single family. 

So, you just used your HELOC for the down payment? Did you get your traditional loan through the same bank? I'm assuming it was a different one...

@Andrew Freed Somebody else brought up this same idea to me - using the flexibility of a HELOC (and ability to make a cash offer) to secure the property, and then later paying off the HELOC with a fixed rate mortgage at a later date.

Could I be upfront with my bank that that's my plan? Is that frowned upon? I really like what you're presenting, because it seems to be the best of both worlds. I just want to make sure there aren't going to be any hiccups or unforeseen challenges of switching it over to the fixed rate mortgage.

First time investor here. I'm looking to buy a long term rental property about 1.5 hours away from where I live. I'm wanting to buy this summer, so about 2 months from now, and I'm trying to explore my financing options now so that I can jump on a deal if/when I find one. I own my current home outright, which has a value of around $250k, and I have $25k cash saved up. Here are the options that have been presented to me.

1) Some lenders I'm talking to are trying to convince me of a HELOC, but I don't really like the variable interest rate. I don't like the idea of of take a roughly $125k loan on a variable interest rate.

2) I asked about a traditional/conventional loan, in which I put down the $25k of my own money, and then financed the remaining amount on a traditional mortgage. One lender tried to tell me that my interest rate would be higher by doing this, and that I should try option 3.

3) Some lenders are trying to convince me of a cash out refi / home equity loan (I'm still fuzzy on what the difference is between them). The benefit of this is that I would have the money in my account, and it would allow me to make a cash offer on a house. However, I don't like the potential scenario in which I take out the loan, start shopping for houses, and don't really find any good deals. Then, I have this $125k loan that I'm just paying for every month out of pocket.

I'm leaning towards option 3, but how can I do the timeline here? How long roughly does it take to close a home equity loan/cash out refi? Could I go "make a cash offer," then immediately run to my bank and secure the loan (because I will be preapproved)? What is the timeline on that?

Is there any other advice that yall have for me in how I approach this?