Investor · Dover, DE · Member since 2018 · 16 posts · 0 votes
We own a rental worth $220k. (Cash flows $400 per month.)
We have a conventional mortgage with $50k left to pay that will be paid off in 2025. We also took a HELOC loan to buy a second rental. That has automatically converted to a 10 year loan that is now at $40k. We have a strong credit rating. I would like to set up another HELOC, but that would be third position. Do HELOCs take 3rd position? If so, how would I find them?
Or....Would it make more sense to just refi both existing loans and then set up a HELOC in 2nd position?
@Amy Yarnall you can do a few things. Refinance out of the property and cash out. OR Just get another Heloc to pay off the current Heloc but for more money. For example a 100k loan and pay off the 40k which will put 60k at your disposal for the next property.
@Amy Yarnall I'm not saying that you wont find a HELOC for a 3rd position, but I haven't ever heard of any?
You can refinance both loans into a 10 year fixed and then follow that up with a new HELOC up to 80% with PEN FED Credit Union. Or you could just replace the existing HELOC with a new HELOC? Or you could just take out a HELOC in 1st position, for enough to cover all the existing debt and the additional that you want to use in your investing?
The refinance followed by the HELOC would be the most expensive as far as closing costs go. The HELOC in 1st position would be the least expensive but have a higher adjustable rate than a 10 year fixed 1st mortgage. So it just depends on what you want to do and what fits you best?