http://ficoforums.myfico.com/t5/Mortgage-Loans/Effect-of-Credit-HELOC-or-Second-Mortgage/m-p/64969#M1951 <div>When I bought my condo I did an 80/20 split over 2  30-yr fixed mortgages.  Since then my home has appreciated and I would like to use my equity/appreciation to get a lump sum cash loan that I can use to invest in another property with a friend (we are flipping a house - should take 12 months). After a year I should have a lum sum I can pay back the additional $$ that I took out on the loan.</div><div> </div><div>Because I already have 2 mortgages I need to refinance the 2nd mortgage to get the cash loan.  can you please advise though which is better for my credit score - refinancing the 30-yr second mortgage or refinancing for a home equity line of credit.  I thought I heard that the HELOC is not as good since it can be considered revloving credit....</div><div>I have great credit score right now and I feel comfortable with sticking with another 30-yr mortgage, but just want to make sure I am making the right choice in terms of my credit score.</div> Wed, 12 Sep 2007 19:43:23 GMT newinvestor3 2007-09-12T19:43:23Z http://ficoforums.myfico.com/t5/Mortgage-Loans/Effect-of-Credit-HELOC-or-Second-Mortgage/m-p/64969#M1951 <div>When I bought my condo I did an 80/20 split over 2  30-yr fixed mortgages.  Since then my home has appreciated and I would like to use my equity/appreciation to get a lump sum cash loan that I can use to invest in another property with a friend (we are flipping a house - should take 12 months). After a year I should have a lum sum I can pay back the additional $$ that I took out on the loan.</div><div> </div><div>Because I already have 2 mortgages I need to refinance the 2nd mortgage to get the cash loan.  can you please advise though which is better for my credit score - refinancing the 30-yr second mortgage or refinancing for a home equity line of credit.  I thought I heard that the HELOC is not as good since it can be considered revloving credit....</div><div>I have great credit score right now and I feel comfortable with sticking with another 30-yr mortgage, but just want to make sure I am making the right choice in terms of my credit score.</div> Wed, 12 Sep 2007 19:43:23 GMT http://ficoforums.myfico.com/t5/Mortgage-Loans/Effect-of-Credit-HELOC-or-Second-Mortgage/m-p/64969#M1951 newinvestor3 2007-09-12T19:43:23Z http://ficoforums.myfico.com/t5/Mortgage-Loans/Effect-of-Credit-HELOC-or-Second-Mortgage/m-p/66012#M2016 <div>I would recommend against gambling your home on an investment property,  In this market you have no clue as to when the rehab property will sell - it could be days from the time you place it for sale or a year.  In the meantime you are carrying a large mortgage with little or no equity in your home.</div><div> </div><div>Besides, if you take the cash from the investment property you will have to pay taxes on it (talk with a tax specialist that deals with Starkers).  Now, you can defer the tax if you buy another investment property with your same friend and follow these rules: buy up, mortgage up and spend all the cash.</div><div> </div><div>Oh, and to qualify for a starker you must hold for at least ONE tax return at a minimum, but better to be safe and hold for 1 year and 1 day to qual.  Attorney differ on this and there is no firm IRS ruling.</div><div> </div><div>Starkers are a little known (by the general public) avenue to defer taxes - and you can convert an investment property to personal use/primary residence (must stay there 5 years to qual for the250/500K exemption).</div> Fri, 14 Sep 2007 04:44:05 GMT http://ficoforums.myfico.com/t5/Mortgage-Loans/Effect-of-Credit-HELOC-or-Second-Mortgage/m-p/66012#M2016 Lady_Scarlet 2007-09-14T04:44:05Z