Hello All.. Quick question for you pro's.. We moved to Hawaii for a contract job....We are renting here and do not intend to buy.. I have a lake house in Texas that is paid for.... This was our primary residence before moving... Can I refi that house and use it as collateral to purchase another rental property?.. The catch is we just rented out the lake house which classifies it as rental property now.. Or is is it still considered a primary residence?... Mahalo....
Investor · New York City, NY · Member since 2017 · 18 posts · 4 votes
9y
Once you've rented it out, it is no longer a primary residence by definition. However if it's paid off, and you have the income to qualify for a home equity loan or line of credit, you can absolutely use that equity for a down payment or to pay cash for an investment property. The interest rate may be higher on it than it would be if it were a "primary residence" is all, and you will likely only be able to get up to 75% of the appraised value as cash, vs much more if it were a primary.
Of course this is all subject to your credit score, debt to income ratio, etc.
Long Beach, CA · Member since 2017 · 11 posts · 5 votes
9y
I asked Bank of America the same exact question over the phone and they told me no that they would not allow a HELOC on rental property. I said even if there was no mortgage and they said no. If you find a bank that tells you yes, please let me know. In the meantime, I think I will walk into the branch and see what they say to my face.