Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
Creative Real Estate Financing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 2 years ago on . Most recent reply

User Stats

3
Posts
0
Votes
Franklin Nunez
0
Votes |
3
Posts

Has anyone ever used their primary homes equity as collateral?

Franklin Nunez
Posted

I haven't been able to get a heloc because I don't have 2 years of self employed tax returns. I want to use the heloc to put towards the downpayment for an investment property. Ive heard of people using their existing property as collateral. How are these 2 methods different? I have over 150k in equity is collateral an option?

  • Franklin Nunez
  • Most Popular Reply

    User Stats

    3,808
    Posts
    2,627
    Votes
    Kerry Baird
    • Rental Property Investor
    • Melbourne, FL
    2,627
    Votes |
    3,808
    Posts
    Kerry Baird
    • Rental Property Investor
    • Melbourne, FL
    Replied

    @Franklin Nunez, ask around at all the small community banks and credit unions near the property. Each HELOC provider has different rules for their requirements, unlike with the conventional mortgage side of things.

    I don't see 2 methods in your post. Do you mean HELOC vs HELOAN or second mortgage?

    A HELOC is revolving, sort of like a big credit card. It will affect your Debt to Income DTI ratio as you use up the line, just like a credit card would do. This can make it difficult to get further financing. You can draw from it and repay, draw and repay for between 10 and 20 years (depending on the bank), before the HELOC turns into an amortizing product, while you start to pay it off. These can have a full appraisal, a drive by appraisal, or some other way they value the property.

    A second mortgage will most likely have a full appraisal and will amortize like a mortgage does, over a set period of time. It will (most times) not have variable interest, and will not fill up your DTI to the same extent. It is more like a mortgage and less like a credit card.

    Loading replies...