I recently talked to someone at Wells Fargo about a Hel. The guy inside the store told me I would probably get somewhere about $150k for the property that's worth about $200k.
After a couple days, a woman called me saying that she will be the voice between the guy at the branch and the under writer.
She stated that the loan will be for $50k instead of the $150k because of my debt to income ratio.
In my opinion, this would be crazy if I took out a loan of $50k for a property that is completely paid off. Do this sound right to you guys?
I am very interested in using the money to "flip" a couple houses, but I think the risk greatly increases since they are only giving me 25% value of my home.
@jon I see. I make about 28k a year and getting ready to rent out my house July 1st.i pay off my credit card every month and just got closed of my 2nd hone last month. The house was 160k with 20% down.
I think that its less risk if they gave me the full 150k because I have alot more to work with and was hoping to pay off the loan after a flip or two. Another thought that I had was to buy another home for about 150k so that what I would still have a house that I completely own without the chance of always having a home to fall back on in my worst situation possiblw.
I may pass on the line of credit u less you guys may think to take the chance..
The lender could care less, fundamentally, what you're doing with the proceeds from the loan. As far as they're concerned, you're getting a loan and you have to pay it back from your paycheck.
Are you living in the house you're thinking about HELOCing? Getting LOCs on rentals isn't easy.
Terms on LOCs are always short. The payments, though, are sometimes IO.
$50K at 4% is a monthly IO payment of $167. I'd guess P&I on your existing loan to be about $575, maybe $700 PITI. That's 30% of your gross pay. Add on the $167 and you're at 37%. Yeah, I can see why that's all they will do. Once that LOC locks, say at 5% for 10 years, that payment is $530 and your total DTI is over 50%. Ouch!
David Luu hi there, your max cash out is always determined based on your debt to income ratio which is not to exceed 45% and loan to value which in most cases not to exceed 85% combined between a first or a second. Now there is a max cashout loan amount limit as well which in your case prob doesn't apply, but as well they look at when you bought the property and how you paid for it and how soon your asking for your money back out of that property . There is seasoning requirement prior to a bank giving you back cash as well. With all that being said Jon Holdman put it together well for you and it looks pretty accurate or close to it.
Jon Holdman Adel Shahal Thank You . Jon, you are pretty close to my numbers. I can see why now. I just moved over to the new place, but I still have some of my bills to my old address ( Insurance, garbage, water, and PGE).
I just don't see many things to do with 50k.. I guess I got some more reading and searching to do.