I will need to get a HELOC very soon to do renovations on a house that has 100% equity (paid in full). How do I find a good lender with the best rates? The property is in Northeast Texas and I am self employed so taxes don't show strong income but have good credit. I know credit unions offer best rates in general but how do I narrow it down from there and what should I look for? Also, I read that if you pull out over a certain amount ($50k?), it hits your credit score differently than if it is a smaller amount. Smaller amounts are seen as a line of credit like a credit card and will appear to your credit that you are maxed out in that account. Larger amount is weighted as a loan and not a credit line. True? If so, what is the amount that determines this?? Thank you.
Start with the bank you do most of your business , checking, etc. Generally, they will want to capture all of your business. Rates might vary slightly between Lenders, but fees & Service is, in my opinion, much more imprtant factors.
@Shirley McLean if your property is in Texas this will range from easy to really, really hard. Is the property you are thinking of getting a HELOC, is it your primary residence? Or is it an investment property?
@Jim Cummings I bank with Chase but I really don't like them and applied at a credit union recently. @Andrew Postell it's my primary residence. i plan to move in for a while (i'm in an apartment during renovations) but once I have it completed (2-4mos), i'd like to rent it out while I travel. Not sure the ins and outs of that with regard to the HELOC.
@Shirley McClain. The HELOC is based on Value of the property. Once you're Approved - you can use the monies most anyway.
I've used a HELOC to pay property taxes rather than take from other investments) buy automobile, etc. With a 100% FREE & CLEAR property - should have no difficulties getting approved - presuming you have current income to make payments.
Don't get bogged down in Analysis Paralysis - but there are some positive changes coming in Texas HELOC (Proposition 2 on Texas Ballot - voting tomorrow) should give you ability to borrow more of your equity.
@Shirley McLean if this is your primary home then that will make it SIGNIFICANTLY easier. So much easier here when it's your primary. You can literally call all the banks around to see what their terms and conditions are to find the best HELOC. Your costs will only differ by a few bucks (maybe $100) but the rates could be different. Maybe try posting this topic in the "Texas" forum and see what results you get? There might be some friendly people here that have done this who can tell you some good lenders. Good luck!
@Andrew Postell thank you so much. plans have changed a bit. I want to renovate the house then sell it. i also don't want to wait to homestead the house til jan 1st b/c then i have to wait for closing on the HELOC of about 45 days and another month for renovations. That's too long. I am trying to figure out the best way to get some type of loan now so I can begin renovations and sell after the new year.
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@Andrew Postell can I get a renovation loan without needing a mortgage loan as well? the house is free and clear, it just needs improvements before I can sell it. if I can get a renovation loan, do I have to pay that back before the home sell or can i pay it after i sell the house?? thank you.
@Shirley McLean you don't have to have a mortgage on the property to receive a renovation loan. The loan would just be the work that needs to be performed on the property. When the purchaser of the home pays you for the house, you would then pay off that mortgage and keep the proceeds. So if the home sold for $100,000 and you owed $30,000, you would keep $70,000 when you sell it. Just like the HELOC would operate. Hope that helps but feel free to ask more questions if you need. Thanks!
@Andrew Postell thank you. it does help. i just need to know what the terms of the loan would be and interest rates but it sounds like a great solution to my problem. I'll DM you to see if you can expand on this.
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