increase value for HELOC?

2 Replies

helocs are usually 80% LTV correct? i found a lender who would do a heloc on my rental property i own free and clear, not my primary residence...they will only go up to 50k and DTI is flexible (around 50% with top tier credit) with a 10 year draw and a 15 year repayment.

how to they determine value? if its a local bank will they send a guy to walk through and nit pick to crush the value? my property is in an area where homes sell for 45-70k. but my property could use some cosmetics. the kitchen could be updated and painted etc....not sure how the determine the value because after all the value is a huge factor in determining what you will get approved for? should i spend a couple grand to enhance cosmetics before i apply? should i look for out of state lenders who rely on comps?

im just looking for a 30k HELOC. and i figure i would get a better shot at getting that approved if my house is valued at 55k and not 40k?!

Even if your home is valued at 40K, that's 75% LTV and as you mentioned most will go up to 80%.

I've not done a HELOC, so I'm not 100% sure, but I would assume they would want to do an appraisal for that. Regardless, the actual value is going to be based on comps - I don't think the bank would send somebody out there to try and lower the value of your property as much as possible...I could be wrong though.

I'd say if you're looking for $30K, you shouldn't have any trouble. I'd go talk to the bank and ask them these questions directly and see what they say.

On a rental they MIGHT go as high as 80%, but don't be surprised if it's as low as 70%. And that is for the CLTV.

I have two properties with LOCs on them. One the bank did not visit the property and just used desk side appraisal tools. The other sent an appraiser to do a full appraisal. So you have to ask them how they plan to set the value. If they do a desk side that comes in too low, you can ask for and pay for a full appraisal to see if it gets you a better value.

But the biggest factor in determining how big the HELOC will go is the already existing mortgages on the property. The "C" in CLTV stands for Combined. Do a forum search and you will see some sample HELOC calculations that I posted previously.

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