Home-equity credit lines

Investors turn to home-equity to fund purchases


HELOC, which sounds like a Truman era missile that we pointed at Russia, is short for home-equity line of credit. Many investors are utilizing these lines to expand their buying power.

Instant equity: Just add a booming real estate market, stir in modest interest rates, cook up some fast cash and make your dreams come true.

Rotonda Realtor Marty Remillard is using a home-equity loan to purchase investment property, and he advises his ReMax Properties clients to do the same.

"It's an interest-only loan with no prepayment penalty," he said. "When you buy additional property with the loan money, you don't have all the closing costs. It's to your advantage."

A smart investor can "snowball" the equity on a series of properties,
Remillard said.

Financial advisors often recommend this vehicle to investors rather than have clients liquidate portfolio holdings. In many cases the investment banking firm has a mortgage division that can handle the entire process.

Home is where the cash is [Sun Herald]