Banks/Lenders that do HELOC's on Investment Properties?

Question

Hi all! Does anyone know of any banks/lenders that are doing HELOC's on Investment Properties currently? I have called several banks, credit unions and have had no luck. Any insight would be greatly appreciated. Thanks :)

Steven Griffith · Answer

Hi Bud,

Yes - Pentagon Federal Credit Union (PenFed) does this.  I took a HELOC out on one of my rentals back in April of this year.  Their terms for HELOCs on Non-Owner Occupied Homes are listed online, but terms for me were 80% LTV, 10yr interest only draw period, 20yr repayment.  interest rate is variable, but minimum 4.75%.  they did have an introductory rate of you pulled money the day you cloased of 3.75%.  PenFed pays all closing costs - if you close the HELOC in the first 3 years, then you'll need to pay PenFed back the closing costs.

They are great!  It took about 2-3 weeks from 1st inquiry to closing on my HELOC.

Natalia Soares · Answer

The below links can get you to the lists that you can call.https://mapping.ncua.gov/#https://www.datatrac.net/

http://www.usacreditunions.com...

I have a list on work computer of a few that I called that got rates from. I’ll forward that once I log on but won’t be until Monday

Bud Gaffney · Answer

Nate, thank you so much for your insight! It's extremely helpful. I will look into that. Thanks again!

Tucker Cummings · Answer

@Steven Griffith & @Bud Gaffney

Yes, I just opened up a HELOC on a property I bought free and clear. Closing is about 60 days because of all the refinancing going on right now. Steven's terms in his first post on this is accurate. And to Bud's point, if you already own 4 properties (primary + 3 investments) you can put a HELOC on an investment property. If you own more than 4 properties, the HELOC must go on your primary. The advantage with them is that they do a valuation purely based on comps in the area and don't require any seasoning. No appraisers have to physically go to the property. They also have a cash out refinance without any seasoning, but it MUST be a 15 year mortgage.

Tucker Cummings · Answer

@Bud Gaffney my thoughts exactly on why investment properties are considered 'higher risk' so they require more down payment and higher interest rates. So the bank is telling me that my income, plus all the income from my other properties, plus the income from the subject property all make it higher risk? Doesn't make any sense

Bud Gaffney · Answer

Awesome! Thanks a lot for the insight and congratulations on your recent success. I currently own 7 properties, so my only option according to PenFed would be a HELOC on my primary. Maybe I'll look into a cash out refi; I wonder if there are any stipulations regarding the number of properties. It's frustrating that owning more properties that are cash flowing successfully and all range in equity from 100K to 400K wouldn't create more solutions for me. I'll keep on keeping on! Thank you again for the insight!

Steven Griffith · Answer

In terms of turn around time, I was ready to close in 3 weeks and had access to the funds immediately (this was back in March/April).  I don't remember what documentation they asked for - I closed on a house a few months before, closed my HELOC in April, and closed on another house in June so it's all running together.

But I know that @Tucker Cummings just used them for a HELOC on one of his rental properties, although I think he owns the property free and clear.  Tucker, can you comment on what documentation PenFed requested when you applied for your loan?  And what is their estimated closing time now?

Nate Sanow · Answer

@Bud Gaffney

I wish this was applicable nationwide in terms of finding a specific list of lenders.

I know there was a local dynamic for you.

In my area I found out the hard way it’s ideal to keep primary + secondary lien positions with the same lender VS a cash out refi. I had unique factors that might not be relevant to you like careers changing and less optimal DSCR for my rental income (offset by fantastic appreciation IMO).

If the credit unions mentioned are smaller they maybe more interested in a 2nd lien position, or maybe they are if bigger too. My understanding is aggressive CU’s will be more willing to make that type of loan VS traditional banks.

Bud Gaffney · Answer

Steve, I may have a chance with PenFed. How much information did you have to send them? What did they ask for? How long did it take to get funded? Any insight would be very helpful. Thank you!

Bud Gaffney · Answer

Thanks a million Steve! I tried TD Bank and no luck. I'm sure I'll find 1! Please ping me if you hear anything.

Banks/Lenders that do HELOC's on Investment Properties?

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