HELOC - Based on after renovation value in Michigan

Detroit, Michigan

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HELOC - Based on after renovation value in Michigan

Christine Edwards

TX · Member since 2014 · 23 posts · 3 votes

Hi,

Does a HELOC actually exist that would be based on the ARV of the property? If so, is the one available for a property in the state of Michigan?

Thanks,

Christine

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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
2y
No, a heloc is based on current appraisal not future. There is a renovation loan that uses the ARV to lend in "Advance". meaning if you need cash to renovate or build its uses the future value ARV and lend off that usually 80% LTV/LTC.
If you are talking about an investment property its even harder in terms of a Heloc. Even once the homes is renovated a Heloc on an invesment property is tough to find. The lenders that do offer them want a 60-65% LTV Max and offer a higher rate versus a cash out refinance.
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
A HELOC is typically a second/junior lien on a property, which makes it higher risk for the lender.
Basing a loan on ARV is also high risk.
Combining those tow is extremely high risk, so have never heard of it being offered.
Why can't you take a HELOC on a different property you own and have equity in and use that for the rehab?
Another option is to research DSR renovation loans.
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