Expert: Matt - 6/15/2006

Question
Hi Matt. I need to purchase raw land to develop a storage business. I have about 500,000 in cash that I could put towards the purchase price of the land which is 1 million. I also owe about 495,000 on my home, which is now worth over 1 million. Would the best approach be for me to pay off the house entirely and then get a home equity loan of upwards of the 1 million and pay cash for the land, or would you suggest I do something else and not pay off the house? I'm sure some of the loan options are less expensive than others, so your advice is appreciated !

Answer
Depends, do you want write offs for the business or your personal taxes.  If you want it for the business keep your cash, as much as possible and go with an SBA business loan.  If you want personal deductions keep your current mtg and get a 2nd mtg for the difference.  I suggest not paying it off in full because your current mtg rate is lower than what you will get today.