Home Equity Line of Credit VS Mortgage

[AndyLuchies]

I know this question has been beaten to a pulp already, but I`m looking for some added clarification. Clearly it seems that a LOC is a much better deal in many respects, but does anyone know the advantages of re-mortgaging your home for more $$$ instead of a LOC?

The reason I ask this is that recently it came to my attention that mortgages don`t always appear on your credit record. Low and behold, my mortgage isn`t listed on my credit rating. This would seem to be a big advantage over an LOC, but is it really? The banks will know I have a mortgage when I go in to ask for financing for a new house anyways. What about if I apply for an unsecured line of credit, or something like that, will they see my mortgage?

Basically, it is any kind of advantage that a mortgage typically doesn`t appear on my credit record or not?
Also, are there other advantages of a mortgage over a LOC?

 

[RobMacdonald]

I don`t recommend not disclosing any debts that you have on any type of credit application. Unfortunately its a practise that is common in the lending industry.

If you check around, some companies are already reporting their mortgage on the bureaus and it`s just a matter of time until the rest do. How will you feel when you go into a lender to re-mortgage and then all of sudden there`s 8 or 10 mortgages that didn`t appear on the original credit application.

Regardless of how many properties you have, there`s always a way to get approved for more credit. You need to be working with a mortgage professional that understands real estate investing.

The advantages between a mortgage and LOC depend basically on your long term goals. Usually you will pay less interest on a mortgage, and it will force you to pay back the principal. A line of credit will create better cashflow today, but your are not repaying the equity. So it will depend on your strategy with respect to the individual property.

You can have the best of both worlds by getting a readvancable mortgage.

 

[AndyLuchies]

QUOTE (RobMacdonaldCMT @ Jan 23 2009, 11:07 AM) I don`t recommend not disclosing any debts that you have on any type of credit application. Unfortunately its a practise that is common in the lending industry.

If you check around, some companies are already reporting their mortgage on the bureaus and it`s just a matter of time until the rest do. How will you feel when you go into a lender to re-mortgage and then all of sudden there`s 8 or 10 mortgages that didn`t appear on the original credit application.

Regardless of how many properties you have, there`s always a way to get approved for more credit. You need to be working with a mortgage professional that understands real estate investing.

The advantages between a mortgage and LOC depend basically on your long term goals. Usually you will pay less interest on a mortgage, and it will force you to pay back the principal. A line of credit will create better cashflow today, but your are not repaying the equity. So it will depend on your strategy with respect to the individual property.

You can have the best of both worlds by getting a readvancable mortgage.


Thanks for the reply. I would always disclose that I have a mortgage when applying for any LOC or mortgage, but I`m getting offers in the mail for pre-approved LOCs and it appears to me that its beneficial that my mortgage does not appear on my credit rating.
You`re basically saying its not a big deal even if it does appear cause there`s always a way to get more leverage even if they stop sending me pre-approvals?

 

[MikeMcCrae]

Go back to Robs comments about getting an experienced Mortgage Broker. All LOC`s are not alike in the eyes of the lenders, even when they appear on your bureau. Discussions with your broker can help you avoid pit falls.