100% financing a second property bad?

I want to move out of current house, rent it out and buy a second. I'm
sure I can get $500/month profit from rent on current home. New home I
want would be about 33% *net* of my monthly income (not including rents
on current home). It is in a nicer area, and it is bigger, thats why I
want it.

I only have enough cash to pay closing costs, plus about 3% of the new
home's price. I am worried if I save up and stall too long, interest
rates will go up. Lender is suggesting 100% financing so I can keep
*required (skeptical)* cash reserves in the bank--I know its because he
wants to get me at a higher rate.

I know this is normally stupid, but I feel my circumstance warrants
consideration since the cost of the new home wouldn't be too hard to
cope with (probably a little aggressive). Comments? Ideas? I don't want
to sell my current home, or take a loan against it.

TIA
John

Re: 100% financing a second property bad?

Well, you want to lock in a lower interest rate because the only other
way you'll be able to afford the payments at a higher interest rate is
if they decrease the price of the home. By that time, it will be sold.