If I purchase a home in all cash would I get a mortgage or home equity loan?
Written By: admin on August 31, 2009
One Comment
I am plotting on purchasing an investment property with 100% cash. I can buy the property at 60% of market value. I then plot on pulling a loan out for 60% of the market value. Would it be considered a mortgage or a home equity loan? A mortgage currently is about 300 basis points lower than the home equity loan. I am hoping it would be considered a first mortgage because it would not be a second lien position. Thanks
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Tags: basis points, first mortgage, Home Equity, home equity loan, investment property, lien position, position thanksTags: basis points, first mortgage, home equity loan, investment property, lien position, position thanks
If you bought the house with all cash and shortly thereafter refinanced the property it would be a first mortgage.
The mortgage are determined as to which mortgage is recorded first no matter what they are called.
Why would you buy an investment property with all cash, and shortly refinance it. Qualify for and get the mortgage, keep the cash for other things. The only way this make sense to an investor is that time prevents you from getting a loan.
There are tax benefits to obtaining a mortgage loan. You should check with your tax consultant prior to making this transaction.
Most investors would not buy a property and pay all cash with their own money for an investment property, it goes against the grain of being an investor. Being an investor you should try and get into a property with as small as possible and still make a profit so as the tenants rent can cover the mortgage monthly payment, taxes and insurance as well as a small left for maintenance. Investors would not tie their money up this way.
The next thing is that if you get mortgage loan as a non owner occupied home the interest rate is higher.
I hope this has been of some use to you, excellent luck.
"FIGHT ON"