Retiree, own 2 prop w/$0 mort. would I qualify 4 Heloc / Equity

[Jason Chin]

Hi, first post and newbie!  

Mom is retired and owns 2 properties (est worth $1.8m) free and clear without mortgages (yay) BOTH UNDER HER NAME ONLY.  I currently live in one house with my young family and she lives in the other property which she also rents out the main portion of the house (for $3200/month) while living in the basement.  She has EXCELLENT CREDIT and also just started collecting social sec (apprx $2500/month).

The house she is living in and renting was a gut renovation and is fine however, the house (2nd property) that I'm in now is in need of repairs.   that brings me here as she is asking if she would qualify for either a heloc or home equity loan.   we are leaning towards Heloc as we would like that extra security for emergencies on top of the home repairs.     

My wife and I both work and earn apprx $160k gross HOWEVER, our credit is less than stellar.    again we are not on the properties and we have apprx $28k debt (2 car loans/ few credit cards).   

Basically, The idea is to be able to use heloc to pay off our property taxes, debts and fix the house.   

would mom qualify on her own based on the above info?  

IF NOT, would we need to be added to the property then reapply?

Would u suggest Starting an LLC and transfer both properties to LLC and the reapply?

THANKS SO MUCH IN ADVANCE!  CONFUSED AND NEED ADVISE PLS!

[Malcomb Stapel]

@Jason Chin  it doesn't matter who on here thinks your mom would or wouldn't qualify. It only matters what the bank thinks. The appropriate step is to find a local lender, setup an appointment, then go chat with them about your goals. 

[Jack Tulloch]

Jason,

The one factor that will likely be the make or break is her income. Only having the social security and the rental income may be enough but each lender will assess that differently. Considering she has excellent credit, strong payment history, and assuming low DTI, I would say there is a strong chance she gets approved.

As Malcomb said, your best bet is going to be calling some lenders and talking them through the scenario.

Good luck!

[Dave Skow]

@Jason Chin 1) focus on getting the HELOC in place on the home she lives in as most heloc lenders are able to do these on primary homes and not rentals 2) do not move into a LLC as most lenders will not lend to a LLC 3) some heloc lenders will not be able to do the loan if the heloc is to be in fisrst position 4) your mother may qualify OK based on her tax returns 5) consider contacting the bank she or you bank with for a HELOC 6) consider contacting the small to mid size credit unions / banks close to the subject property for heloc options

[Henry Lazerow]

You can use property income to qualify so most likely answer is yes assuming your mom does not have significant other debts. 

[Mohammed Rahman]

Hey @Jason Chin great job for putting yourself out there, but as @Malcomb Stapel put it - reach out to your local lender (maybe the one your mom has a relationship with already) to have this discussion. They will better understand your scenario (& market) and provide a solution that caters to her needs. 

The good thing is your mom has a ton of equity built into the homes, so I don't foresee any difficult in pulling out some equity to help her fix it up.