Does a HELCO count as mortgage

Question

I am in the process of getting a prequalification letter to purchase a rental property. My mortgage broker is saying she has to wait for underwriting to get back to her cause she thinks that the HELCO will count as a mortgage. If she counts the HELCO and the new loan my partner will be at 5. Her company only allows 4 mortgages so she thinks it will be a problem. Has anyone run into this problem. Any help is greatly appreciated.

Thanks

Rich

Thanks

Rich

Rich Vogel · Answer

Thanks for all the help!!!!!!!!!

Chris Mason · Answer

Fire that loan officer, find a new one local to you that is actually investor friendly that works for a company that is investor friendly. No lender that caps you at 4 financed properties is investor friendly. That policy alone is enough to tell you that they don't want your business, and is a huge red flag that you will face trouble once in contract and in underwriting.

To answer your question directly:

Of course a HELOC is a mortgage. I mock any lender saying they need to even ask that question! That's like a baseball player asking if a catcher's mitt that fits on your right hand still counts as a catcher's mitt.

However: it may or may not count in the "number of financed properties" total. A property with 2 or 3 or 50 mortgages on it counts as one "financed property."

Property A: first mortgage. Counts as 1 financed property.

Property B: first mortgage and a HELOC. Counts as 1 financed property.

Property C: HELOC only, no other mortgage. Counts as 1 financed property.

Property D: No mortgage. Does not count.

In that example, there are 5 mortgages across 4 properties. But the grand total of "financed properties" is three.

Edward B. · Answer

@Rich Vogel, really need a loan originator, or better yet loan underwriter to chime in. In 2012 I ran into something similar where they were counting all of my loans instead of just the number of my financed properties. More recently I have not run into that and a financed property was considered one financed property regardless of how many loans were against it. I believe counting every mortgage is a lender overlay and not an actual Freddie or Fannie requirement. That means it might be a problem for that particular lender but not all lenders.

Shaun Weekes · Answer

Heloc's are liens against your home so it will have to be counted as a mortgage.

It's really important that you find one Loan officer or broker and let them know what your goals are.  This way you will be able to tackle these hurdles in advance.

Fannies Mae goes up to 10 financed properties so you're not completely messed up.

I hope this helps.

Does a HELCO count as mortgage

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