I own a 8 units apartment building free and clear in Ohio. Its worth 250k. I need cash to buy more so I was wondering if I could pull out an heloc and refinance it at the same time.
So, my idea is the heloc is just an open line of credit so I dont think that would prevent me from refinancing it. Would that be a red flag for a bank to see a open line of credit for 200k when refinancing it?
Heloc for 200k and cash out refinance another 200k. That would get me 400k total to invest.
Zero chance of that happening unless you committed some fraud. 70-80% will be the most you get. Not 180% unfortunately.
But heloc isnt cashing out. Its just a line of credit available to you. If you havent used a dime out of the heloc, is that still a problem?
Yes it’s a problem, you could pull out $209k at any time. NO lender is going to give you a mtg being junior to a $200k heloc....it would make absolutely no sense and they aren’t total idiots.
Cash out refinance is a debt but heloc isnt a debt until you start spending it. So how refinancing with heloc be a problem to banks?
@Jay Lo Consider starting out with Cash Out/Refi first. Then wait till you accumulate some equity back and do a HELOC. This is perfectly legal and allowed. Alternatively, there're always other financing opportunities out there like investors for instance.