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Yeah I guess I am not trying to provide a super in-depth explanation of how finance works here, since that's not the topic we're discussing. I am not a financi
by sbarre 5y ago
Yeah I guess I am not trying to provide a super in-depth explanation of how finance works here, since that's not the topic we're discussing.
I am not a financial expert, but I have been told by professionals, and read in credible publications, that financing entities are not thrilled about the idea that people can effectively 100% finance additional home purchases using HELOCs, rather than having a cash downpayment.
That's the point I was making. My apologies for drawing an incorrect conclusion on the unrelated details.
- bombcar 5y ago100% financing is problematic mainly because the "owner" has zero incentive to not walk away if the house goes below purchase price even if they could afford to keep up the payments. This puts the "bank" (read: bank and the investors the bank sold the loans to) in a precarious position, as a slight downturn in the market could result in a large percentage of loans defaulting.