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HELOC or Loan?

Hi all, I have about $250,000 Home Equity Line of Credit from my current home. If I want to invest and buy let's say a condo for $250,000. Would it be better for me to get the money from my HELOC and pay off the condo or get a loan from a lender? Is one better than the other? which one has lower interest rate? I am in Southern California. Please advice. Thanks in advance, Al

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Reply to
al
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If either of the loans have variable rate, then you have more risk. The H/E loan may be tax deductable, where as a loan for investment property may not be. You need to look into the details. Do you plan to buy more real estate? If so, be aware that banks will cut you off after the 3rd or 4th or 5th loan. Using your H/E loan allows you to buy a property without a new loan. Later, you can look at a 3rd property, and you have a paid-for 2nd property to borrow on. You will find it easier to get that

3rd, 4th, and 5th property. Again, if the condo is bought to flip, it will be easier to sell since you will not have a loan on it that has to be taken care of at closing.

-john-

Reply to
John A. Weeks III

"al" wrote

What John said. Importantly, also note that the IRS among other things limits the total (that is, on first and second homes) home equity debt (for which the interest is permitted to be deductible) to $100k. See

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It's a funny time for investing in real estate. The flipping mentality is a bad one to have, right up there with other get rich quick schemes, IMO. So I hope you're prepared to own this condo for awhile, worst case.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Elle

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***FROM THE MODERATORS: We erred in posting the above. It was cross posted and got by us. For those who wish to respond to this thread on this newsgroup, please insure that you are only posting to misc.invest.financial-plan. Sorry for our mistake.

-HW "Skip" Weldon Columbia, SC

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
HW "Skip" Weldon

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