Down payment secured, whats next?

Question

Looking for advice. I own a property in PG county Md free and clear and took out a HELOC to use towards a down payment and repairs. Only thing is i dont know what kind of loan i should get... i keep hearing about conventional, portfolio lender, and 80-10-10. I really want to jump into another property but dont know what steps to take. Any advice on which route would benefit for a cash flowing property

Jerry Padilla · Answer

@Janiel Vanderhorst

Conventional has more strict guidelines - but you will see lower fixed rates with this route.

Frank Geiger · Answer

Start calling up lenders and asking them what products they can offer you. You're probably looking at a conventional if you don't want to occupy.

Janiel Vanderhorst · Answer

@Jerry Padilla i qualify for both but what are some pros and cons with each (conventional, portfolio) that i probably cant find on google

Janiel Vanderhorst · Answer

@Michael Krupp sorry i wasnt clear enough. Yes my property is paid off, the property is worth 90k as is. My intentions are to use part of the heloc money to use as a down payment towards a future property and a few repairs. What im trying to figure out is with me being stationed in virginia and wanting to invest in a property in maryland what would be my best option (mortgage wise) to use as an investment. I know i cant use a va loan or a fha due to the fact that i would have to live in the unit.... my goal is to purchase a cash flowing unit and pay the heloc and mortgage with the tenants rent money

Jerry Padilla · Answer

@Janiel Vanderhorst

Rates are low now so a cash out a max value with conventional is where you will see the lowest fixed rates. Then a HELOC to follow is a great way to go. Just keep in mind that a HELOC has an adjustable rate. Portfolio lending is great when you don’t qualify for conventional.

Michael Krupp · Answer

Hi Janiel, I apologize for I am not completely clear on exactly what you are trying to accomplish, if you can help clarify your intentions and goals.  You own a free and clear property, what is it worth as-is and fixed up if need be?  Did you take the HELOC out on it or another property?   Is the down payment for another property that you have in your sights, or for a future property?  Are the HELOC funds to make repairs to the free and clear property you own so you can rent it I would assume, not flip it?  Depending on the property, your financial and credit situation, and your time frame, the loan options would vary. If the property has a solid rent to debt ratio or DSC Debt Service coverage, and is in a decent area, there should be multiple options, especially if your credit and financials are good. Even if not, with a good DSC, you should still be able to get favorable terms on a long term rental loan.  I assume you are also looking for cash out from this property to leverage into other deals?

Janiel Vanderhorst · Answer

@Frank Geiger thank you

Janiel Vanderhorst · Answer

@April Kennedy any good recommendations in the pg/moco area for conventional loans??

April Kennedy · Answer

@Janiel Vanderhorst it depends on the condition of the property and loan amount. For conventional, some lenders won't lend anything lower than 50-60k, also the property must be in move in condition (all systems working). If you want a loan lower than that or in not so good shape...look for a portfolio lender.

Down payment secured, whats next?

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