Refinancing a rental

4 Replies

Hello,

I have a single family rental located in Connecticut that I would like to refinance to extract equity. The current mortgage is $153k and the current value by a local trusted realtor is $270k +/-.  I plan to invest the equity into another rental property.  I have a few questions:

1. Is it possible to have a HELOC type loan on a rental property? If yes, who offers?

2. What is the standard loan to value percentage on a rental?

3. From the user community: is their a lender that you would HIGHLY recommend?

4. What is the best type of loan for extracting equity given my scenario?

Thank you all!

1. Yes you can get a HELOC check with some smaller local banks and credit unions.

2. Somewhere between 70-80% LTV depending on the lender.

3. I'd start with your small local banks and credit unions but there are national lenders as well.

4. You could also cash-out refinance as another option at the same LTV.

Remember with a HELOC you only pay interest on money you are actually using. So if you get a HELOC for $50k and only use $20k to purchase another property you are only paying interest on $20k.

If you go the cash-out refinance route you are paying interest on the entire loan from day one.

At a 75% LTV based on a $270k ARV you would have access to $202k minus your $153k debt leaves about $50k.

Thank you Brian!

I know of specific mortgage products geared towards real estate investors that will allow up to 85% cash out on investment properties (1-4 unit only). Just have to know the right lender.

Debra A. Denimarck, Lender in NJ (#1519547), FL (#1519547), CT (#1519547), MI (#1519547), MA (#1519547) and PA (#1519547)

    Michael - what is the int rate on your present 153K loan ?  some  answers below

    1. Is it possible to have a HELOC type loan on a rental property? .......there  are  not many lenders  offering this ......check with the  smaller  lenders / credit unions  and maybe the banks you have relationships with

    2. What is the standard loan to value percentage on a rental?......on a  1st mtg  cash back  refinance - 65-70%  ...you will need to  ask any rental  heloc lender this  question but I assume it wont be too much higher

    3. From the user community: is their a lender that you would HIGHLY recommend?

    4. What is the best type of loan for extracting equity given my scenario?......depending on how much cash is needed  and how long you plan to carry this  debt ...check out a notmal  1st mortgage  cash oout refinance  as an option

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