Can I get a second HELOC on a new purchase and rent my 1st home?

Question

Can I get two HELOC's at the same time on two properties, assuming good credit and income. I need to pay off the private money loan on the new property plus remodel expenses. Paid $90k with $20k down, secured a $75k 1 yr interest only loan. Need to borrow $125k to pay off loan and $50k cash out for remodeling expenses. Can I go to US Bank for a second HELOC on this property or should I look for a different lender? Will lender call first HELOC loan upon rental to my son?

Andrew Postell · Answer

@Robert Golden I think the answer here will be "no" to your inquiry for another HELOC....but I feel you structured this incorrectly in the beginning.  Most loans that we use to ACQUIRE the property are based on the After Repair Value (ARV).  And most of those loans will lend you 75% of the ARV.  So if you used a loan to buy the property....and that loan required you to have 20% down....AND it didn't include the renovations....that's not a good loan to have.  I would immediately start looking for a different lender.  Using a loan structured in that fashion causes a lot of issues and you are facing one of them right now.  That loan is not designed for what we do as investors.  Try to find a lender that will lend based on the ARV of the property and include the renovations.  70% would be acceptable but 75% is the goal.

Robert Golden · Answer

No, no, I am trying to pay off the first (private money loan of 75k) and borrow $50k more for remodel, the new HELOC (on the newly purchased home) will be for $125k and in first position, property value $200k. My worry is I already have a fairly new HELOC on my other house that I got with US Bank and I claimed it as my primary residence to get the loan, which will now change to the new house, turning the existing house with the 7 month old HELOC, into a rental to my son. Will the bank call for the loan to be repaid sooner? Will the bank consider a second HELOC on the new home and still carry the first one or should I not make waves and just try with another lender?

Bob Okenwa · Answer

In my experience, I have not seen a lender that would be willing to take 3rd position after the primary mortgage and 1st HELOC.