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re: Secured LOCs: What is the point?
Posted on 2/12/16 at 1:31 pm to Volvagia
Posted on 2/12/16 at 1:31 pm to Volvagia
Why not use other peoples money at a cheap to make more money? Our "secured" LOC is on equity on my parents house. It's paid off and we have access to a good amount of cash. I can buy a home with our LOC, fix it up and rent it and in 60 days roll it into a more fixed rate deal and release the LOC.
If we wanted to use our own funds, we would have to put down 20%, plus the cost of any repairs. Using the LOC, we literally don't have to come out of pocket on penny(minus $250 inspection fee before purchase). We could afford to pay for every house we have with cash too, but why tie up your own?
If we wanted to use our own funds, we would have to put down 20%, plus the cost of any repairs. Using the LOC, we literally don't have to come out of pocket on penny(minus $250 inspection fee before purchase). We could afford to pay for every house we have with cash too, but why tie up your own?
This post was edited on 2/12/16 at 1:35 pm
1
Posted on 2/12/16 at 4:02 pm to stevengtiger
You proved my point, most of the posts seemed to be answering the subject line as opposed to the OP.
I am NOT speaking of HELOCs which allow you to tap an otherwise illiquid asset cheaply.
Or even portfolio lines of credit where one could be betting that the growth of the assets could outstrip or downsize the cost of interest.
I'm talking having x money in the bank, and using that cash as collateral for a loan for a lesser amount of cash than the savings account balance.
In essence, paying a loan to use dollar bills you already have in the bank and could use with no sale or loan needed. It's already there.
I was just wondering if there was some other reason than credit building or forced discipline. It seems like there isn't.
I am NOT speaking of HELOCs which allow you to tap an otherwise illiquid asset cheaply.
Or even portfolio lines of credit where one could be betting that the growth of the assets could outstrip or downsize the cost of interest.
I'm talking having x money in the bank, and using that cash as collateral for a loan for a lesser amount of cash than the savings account balance.
In essence, paying a loan to use dollar bills you already have in the bank and could use with no sale or loan needed. It's already there.
I was just wondering if there was some other reason than credit building or forced discipline. It seems like there isn't.
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