Private Lending & Conventional Mortgage Advice

User Stats

4
Posts
2
Votes

Best lenders for HELOC

Posted Jun 24 2022, 14:26

Hello,

I am currently looking for advice on a reputable lender for a HELOC. I believe this is the most advantageous route for me to pull equity out of my home now. (I am open to hearing otherwise as well). I would like to make home improvements both on the inside and outside. I would also like to use some of the equity to pay off some debt I have accumulated. I know that I can withdraw a specific amount of money over a period of time. If there is money still available after these expenses I would like to use it as a down payment on another property to start my REI career.

      I am looking forward to any feedback, thank you. 

-Mark

Southeast NC, North Carolina

User Stats

6,164
Posts
4,735
Votes
Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
4,735
Votes |
6,164
Posts
Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
Replied Jun 24 2022, 14:42

@Mark W Twarog normally we are talking about investment properties on this website....but are you asking about a HELOC on your primary home? Or an investment property?

Lender Texas (#392627)

User Stats

4
Posts
2
Votes
Replied Jun 24 2022, 14:52

Hello Andrew,

I am new to BiggerPockets and thought this would be a great location to start. I am asking about a HELOC on my primary home. But I would also like to use that HELOC to purchase an investment property in the near future. I was hoping to find someone that would be able to guide me if this is a possibility.

User Stats

250
Posts
292
Votes
Al D.
  • Investor
  • San Francisco, CA
292
Votes |
250
Posts
Al D.
  • Investor
  • San Francisco, CA
Replied Jun 24 2022, 19:54

@Mark W Twarog You may want to mention the state the subject property is in - there may be good regional lenders in certain locations.

While this is not the main concern of your post, but from your stated goals, I’d like to remind you of some changes in effect from a few years ago for a few more years that some people I come across are not aware of regarding HE interest tax deduction: using primary HE for improvements on the subject property may be tax-deductible for you, so may be using it to invest (absolutely speak with your tax professional - don’t count on my advice,) depending on nature of that investment. However, using it to pay off other debt is no longer a tax-deductible use of HE, while may still be a better option regardless of any tax benefit because the original debt may have higher interest rates.

User Stats

4
Posts
2
Votes
Replied Jun 25 2022, 06:58

Hello AI,

     Thank you for the advice, that is good information to know. You are right the interest rate (on debt) VS tax deduction would be higher over a period of time. Best of luck, thank you.

User Stats

21
Posts
10
Votes
Chris Choe
  • Lender
  • Maryland
10
Votes |
21
Posts
Chris Choe
  • Lender
  • Maryland
Replied Jun 25 2022, 07:17

@Mark W Twarog while the traditional route would be to go to a credit union, they've been tightening on their ratios due to the slow down. Currently, the best route is to shop for a mortgage broker who has access to investors that provide HELOC products. Note that rates do change dramatically when you pass certain LTV thresholds. It's best to share your specifics with a broker so that they can price out your scenario and present you with your options.

User Stats

1,365
Posts
913
Votes
Replied Jun 25 2022, 07:24
Quote from @Mark W Twarog:

Hello,

I am currently looking for advice on a reputable lender for a HELOC. I believe this is the most advantageous route for me to pull equity out of my home now. (I am open to hearing otherwise as well). I would like to make home improvements both on the inside and outside. I would also like to use some of the equity to pay off some debt I have accumulated. I know that I can withdraw a specific amount of money over a period of time. If there is money still available after these expenses I would like to use it as a down payment on another property to start my REI career.

      I am looking forward to any feedback, thank you. 

-Mark


This is too generic. For me, what I'm looking for HELOC, it has meets two criteria :
1. able to pay principal during draw period, and draw period is 10 years
2. able to convert portion of the debts or tranches, into long term fixed loan (so in some way acting like 20YFRM)

User Stats

80
Posts
42
Votes
Eddie L.
42
Votes |
80
Posts
Eddie L.
Replied Jun 25 2022, 11:48

Are there any recommendations for a small business line of credit to help with investment property acquisition and rehab?

User Stats

228
Posts
263
Votes
Lawrence Briggs
  • Investor
  • Texas
263
Votes |
228
Posts
Lawrence Briggs
  • Investor
  • Texas
Replied Jun 25 2022, 12:42

Great question, @Mark W Twarog! Recently, I used PenFed for a HELOC on my primary residence. Based on the process from start to finish, I did not have any issues. I would say to be sure to have all of your paperwork ready for submission, such as mortgage statements, property taxes ledgers and proof of homeowner's insurance. The term is for 30 years (20 year draw and 10 year repayment) with 20 years being interest only payments. I hope this helps, and if you have any more questions, please let me know!

User Stats

29
Posts
11
Votes
Orlando Ortiz
  • Rental Property Investor
  • New Jersey & Virginia
11
Votes |
29
Posts
Orlando Ortiz
  • Rental Property Investor
  • New Jersey & Virginia
Replied Jun 26 2022, 08:23

Hello Mark,

This is just as an example of what a family member did in a similar case to yours. And it turned out good. 

* If you want to get into REI, join a couple REIA near you to learn the basics and find a mentor.

* Maybe, the best move to pay off debt and renovate your personal home would be to cash out refi? Get together with a lender and get information from that professional to fit your need. I'm sure we have member on BP that can give you better advice than me. But I am just giving my opinion.

* After the refi, and if you have enough equity. Eventually, you can open up a HELOC to invest. It depends on your need and strategies.

* Lenders have tightened up so consult with them first for your best course of action.

User Stats

36
Posts
15
Votes
Artem Belayev
  • Rental Property Investor
  • Shoreline, WA
15
Votes |
36
Posts
Artem Belayev
  • Rental Property Investor
  • Shoreline, WA
Replied Jun 26 2022, 13:29

Hello @Mark W Twarog and welcome to BP! I was just looking around for a heloc on an investment property.

For primary residence you can try TD bank, Penfed, Homebridge, Bank of the West. They all do primary helocs. I would look into a value add deal so that you can pull money and pay back your heloc back. Since helocs are adjustable rate and we don't know where the rates are headed. Hope that helps!

User Stats

15,676
Posts
10,783
Votes
Will Barnard
  • Developer
  • Santa Clarita, CA
10,783
Votes |
15,676
Posts
Will Barnard
  • Developer
  • Santa Clarita, CA
ModeratorReplied Jun 26 2022, 13:51

Brokers and credit unions are your best bet for a HELOC on your primary to use the funds for investment. It goes without saying that underwriting your investment and building your team are of vital importance to ensure they spit out cash to pay the monthly HELOC payments.

User Stats

4
Posts
2
Votes
Replied Jun 29 2022, 12:08

Hello Everyone,

  Thank you for all the feedback and advice, I feel more comfortable now with this guidance. 

-Mark

User Stats

5
Posts
2
Votes
GUY MEYITANG
  • Brockton, MA
2
Votes |
5
Posts
GUY MEYITANG
  • Brockton, MA
Replied Jul 13 2022, 15:53
Quote from @Mark W Twarog:

Hello Andrew,

I am new to BiggerPockets and thought this would be a great location to start. I am asking about a HELOC on my primary home. But I would also like to use that HELOC to purchase an investment property in the near future. I was hoping to find someone that would be able to guide me if this is a possibility.

PenFed is definitely the best