100% LTV HELOC...should I do it? #Notfinancialadvise

[Brandon Bell]

Hello All,

I have a duplex that I am house hacking and I just had it appraised for $425,000; meaning I have approximately $175,000 of equity in it. I was initially going to do a cash-out refinance and pull around $80,000 out, but I would have been going from a 2.5% interest rate to a 4.7%. A local credit union is offering me a 100% LTV HELOC at 10% fixed interest (5 Year Draw - 10 Year Repayment). They are also offering 90% and 80% LTV with slightly lower fixed interest rates.

I am planning on moving this summer so if I want to tap the equity using a HELOC I should do it sooner than later. If I get the HELOC, I would probably use it to help with the downpayment on my next house hack (assuming the numbers work out) and get my first Midterm rental. So essentially, my property would become a hard money lender for me lol.

I think it is important to note that this house hack is my only investment property and contains the majority of my wealth. I have been extremely blessed with the crazy appreciation over the last few years from covid, the town cleaning up my street, and a lot of local development. 

I've never really heard anyone talk about a 100% LTV HELOC, so I'm curious if others would jump at the opportunity or consider it too much of a risk.

Thanks!  

[Tyler Fontaine]

Mmmm I love seeing stuff like this. Good for you on setting yourself up to be in a position like this. 

If I were you I would make a plan on how to allocate the monies. If you can get into a BRRRR, flip, or any type of value add I would strongly consider doing this. You can use the funds as down payments on other Hard or Private monies. Doing this will allow you to recycle your cash as you exit into regular loans on what ever you buy.

Example. You find your next house hack thats a value add (opportunity to increase rents, rehab units, etc.) HELOC lets you get access to Hard/Private$ to buy the asset. Then you can use your monies for rehab cost. Rent. Refi, and pull out the majority of your original capital to put it back into savings, invest again, etc.

As long as you have a plan on how to deploy the capital and the returns beat what ever your interest rate is on the monies you'll be in good shape

[Scott E.]

There is no reason not to take out the HELOC, unless they are trying to charge you a bunch of closing costs.

I wasn't aware that any lenders were even doing 100% CLTV HELOCs. I say go for it. Just like a credit card, you don't have a payment unless you pull out the cash. So don't pull out the cash unless you find a screaming deal.

[Benjamin Aaker]

Set up the HELOC and it can sit waiting for the right opportunity. I'd go with the 80% LTV one. The interest rate is less and you still have some equity in your current property. Just make sure that the new property can pay back the HELOC payments out of it's NOI.

[Altanzul Sabatino]

Hi. I have $100000 HELOC in my bank. Do you wanna become partners and flip the house with me and my husband? We r living in Rockingham country area. Our area is very wealthy.

[Christian Ehlers]

If you are looking to scale I would take the 100% LTV option as mentioned earlier it doesn't cost you anything until you use it. Equity doesn't really do you any good if it's just sitting in a property so why leave 20% of it unusable if you don't have to? Just be sure to run your numbers on your next deal and make sure you have a plan of paying the HELOC back whichever route you decide to go. Good luck investing!