Keep The Equity Or Not?
Hi, we are purchasing our first property. My question is the single family home appraised for 38k, we are paying 25k. Being this is our first property should we leave 20% equity in the house so we dont have to pay PMI and take out at $30,400 loan and take the $5400 cash or try for the full 38k.
The property taxes are already paid for this year, all we need is insurance and do some cosmetic repair, painting and flooring in the home before renting.
Also we were going to try the Section 8 program. Any advice would be appreciated.
Kim
Western PA 
I forgot to say that the sellers are paying closing costs.
Kim,
PMI on a 38K loan, the payment would be less than an interest only $10K heloc payment. So if you could use the money (wisely) Use it!!!!!!
Lori
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Yeah, I agree with Lori,
We are at record low interest rates. Borrow all you can where you can lock in the rate. But hold the money as a reserve account against future contingencies or use it as downstroke to buy more property. Spend not a dime on consumer goods or vacations.
General suggestion.
Borrow as much as you can if the cash flow from the subject property can cover all running costs including vacancies. Try to keep the rate stable so that you do not see a radical change in the cash flow. Best would be if the payments change they do so at about the same rate that the rents change. It is not possible to lock the relationship between the so but use it as a target.
As to Section 8. I have no direct experience. I am looking at a deal that will have me jump into Section 8 so I am trying to educate myself.
What I do know is the standard and the possible repairs are sometimes an issue. Make sure you have reserves to make repairs promptly and that you pass the annual inspections.
John
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