I have 2 homes, one is owner occupied, and both have no mortgage. I'd like to use this equity (some of it) to fund house flips and RE investing. 220K in one home and 425K in our owner occupied home. What's the best way to go about obtaining a line of credit against one or the other?
go talk to a mortgage lender to get a heloc in place
@Rodney Marcantel There are two type of equity line of credit: secured and unsecured.
Secured meant that you have to put your house on collateral - low rate.
Unsecured meant that you don't have to put anything on collateral - high rate. Similar to applying for credit card, but need to send in paystub, income tax, ...etc.
Since you have something to collateral, I would recommend secured equity line of credit against your single primary house as you can get the most out of it, FYI: high LTV. In this case, if your single home appraises for $425k, then some banks will allow up to 90% LTV which is $425k*0.9 = $382.5k. This is a lot of money, and I recommend that you only use one house to pull out equity as you want to play save.
I also recommend that try leveraging by using hard money lender, instead of using your $382.5k. Only keep the $382.5k for backup to pay for holding cost .....
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Great feedback. Thanks.
Thanks for the information. I am aware of the two types of lines of credit and plan to use my home instead of the investment home for HELOC. It will only be to secure properties (paper) and then either buyers for a quick profit or our investment partners (which we've already secured) at 1 - 3% interest per month plus closing costs depending on the type of loan needed for a rehab...
- Transitional Funding - small closing costs plus 3%
- Cosmetic Rehabs - moderate closing costs plus 3% and 80% load to value
- Major Rehabs - small closing costs plus 1 - 3% depending on size of loan and 80% loan to value
- Or a cash out refi against non-owner occupied property owned free and clear up to 50% loan to value.
So you can see, we have some things in place and ready to get our first property under contract (the right property) and either wholesale it or rehab it depending on location and whether we want to rehab it or not.
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