Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@glen ...
I know it's me. I am not trying to be argumentative, it's just that some REI terms are overloaded. They take on different meanings depending on the parties in the conversation. I know what you mean when you say "Whether or not it's called a "HELOC" or some other line of credit is irrelevant." But the bank guy doesn't necessarily know what you mean. "Prime Equity Line of Credit" is not a HELOC. Underwriting, rates, terms, ... all different.
I expected to see something like your above post. My only suggestion (no hate posts, please, I'm trying to be constructive) is to avoid using the word HELOC when inside a bank... unless of course you mean getting a second mortgage on your personal residence. "Equity draw", PELOC, "LOC for rental"... anything but HELOC. My 2 bitcents.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
The collateral for a HELOC is your primary residence. So HELOC on a rental is an oxymoron. Local banks may entertain a LOC (Line of Credit) with the collateral being income producing real estate. Many banks want first position collateral only, and may put limits on the use of (draw from) the LOC. Some banks refer to it as a 'substitution line' since the purpose of the line is for buying (or building) using other collateral, or substituted collateral, already pledged by the line. Local banks may entertain a LOC against construction property (via draws) as well... the collateral being the property under construction.
Investor · Sunnyvale, CA · Member since 2013 · 62 posts · 19 votes
12y
I'm in the process of applying for a HELOC on a rental in Vegas. I'm doing it through Wells Fargo as they hold the mortgage for it also. Last year when I tried they told me that they were only lending up to 60% LTV for rental/investment properties in Vegas. However, this time they said their guidelines have changed and they are now going up to 85% (same as owner occupied). Not sure if that's accurate since I was speaking to the guy who just takes down the initial information but we'll see. Didn't you get something from the bank(s) that turned you down explaining their decision? Sounds like factors other than equity are contributing to your denial.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
If it's a HELOC, the collateral won't be your rental. They have other Lines of Credit (LOC) for NOO property, like their Prime Equity Line of Credit. Their HELOC program is here: (https://www.wellsfargorelo.com/loans/yourcompany1096/loan-programs/home-equity-loan-line-comparison.page ... "secured by owner-occupied properties"... )
Investor · Sunnyvale, CA · Member since 2013 · 62 posts · 19 votes
12y
Reading the fine print of the link you referred to, that is an example of the interest rate for an owner-occupied home. It doesn't say anywhere in that section that non-owner occupied homes are not eligible for a line of credit. I was extremely clear to the person I was talking with that this was an investment property and that it would be the collateral for the loan. In the past, when I've spoken with Wells, the limiting factor was LTV (based on location) and not whether or not it was owner-occupied although it wouldn't surprise me if the rate was higher as it was for my investment property mortgages. We'll see what the actual underwriter says when they call me back. Whether or not it's called a "HELOC" or some other line of credit is irrelevant.
I'm in the process of applying for a HELOC on a rental in Vegas. I'm doing it through Wells Fargo as they hold the mortgage for it also. Last year when I tried they told me that they were only lending up to 60% LTV for rental/investment properties in Vegas. However, this time they said their guidelines have changed and they are now going up to 85% (same as owner occupied). Not sure if that's accurate since I was speaking to the guy who just takes down the initial information but we'll see. Didn't you get something from the bank(s) that turned you down explaining their decision? Sounds like factors other than equity are contributing to your denial.
Glen et. al.,
It's interesting that Wells Fargo is doing up to 85% LTV. Typically, Wells is very conservative with their underwriting. We just got a HELOC on an investment condo in San Jose with Wells Fargo at 5.25% for 70% LTV last month. Please report back if they do indeed go up to 85% LTV after you got it. I know U.S. Bank will go up to 90% LTV on primary residence It's 4.25% for 80% LTV and 5.25% for 90% LTV.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
I would be surprised to see any lender go above 80 CLTV on a HELOC for a rental.
When anybody mentions HELOC here in the forums, and thinks that they can get a large loan, sometimes a reminder on CLTV is needed to temper the exuberance. In the case of the OP, with equity being 60% implies that the loan amount could be as high as 40% based on 80 CLTV; that's not too bad IMO.
Investor · Sunnyvale, CA · Member since 2013 · 62 posts · 19 votes
12y
Just as an update, after going through the initial screening process (which took a while given our properties), I heard back from Wells Fargo. They shared a couple details while explaining why I wasn't going to get it. :) First, the initial sales person was wrong and for our property in Vegas they would only do 60% LTV. Not a surprise based on my previous contact with them but annoying that I was told differently by the initial screener. Second, if you have more than 4 mortgages they said they wouldn't do a home equity on investment properties. I didn't think this would matter for a HELOC but apparently it does. Lastly, although it wasn't a problem for us, the minimum credit score for HELOC's on investment properties is 740. I may shop around and try and find another bank/lender who will do the loan and post an update later. We'll see.
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
12y
Glen,
That's disappointing news. I have a portfolio lender that can do cash-out refinance on 5+ properties. Sorry no HELOC. The caveat is that most of my investment properties are fixed between 3.75% to 4.25% for 30-year. So it's a premium price to pay to refinance these properties at the current interest rate.
Note: It's 5% interest rate on cash-out refinance for properties 1 to 4. The rate is 6% on 5+ properties. No loan below $150k. I just completed 2 cash-out refinance at 5% interest rate. On loan 5+, I'm taking them to East West Bank at 4.25% ARM (prime +1%). The max LTV is 50% on investment properties though. The biggest difference is that all of my properties are in San Jose.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@glen ...
I know it's me. I am not trying to be argumentative, it's just that some REI terms are overloaded. They take on different meanings depending on the parties in the conversation. I know what you mean when you say "Whether or not it's called a "HELOC" or some other line of credit is irrelevant." But the bank guy doesn't necessarily know what you mean. "Prime Equity Line of Credit" is not a HELOC. Underwriting, rates, terms, ... all different.
I expected to see something like your above post. My only suggestion (no hate posts, please, I'm trying to be constructive) is to avoid using the word HELOC when inside a bank... unless of course you mean getting a second mortgage on your personal residence. "Equity draw", PELOC, "LOC for rental"... anything but HELOC. My 2 bitcents.
.... I heard back from Wells Fargo. They shared a couple details while explaining why I wasn't going to get it. :) First, the initial sales person was wrong .....
yup. pretty much sums up my experiences w/ Wells Fargo.... ;)
I know it's me. I am not trying to be argumentative, it's just that some REI terms are overloaded. They take on different meanings depending on the parties in the conversation. I know what you mean when you say "Whether or not it's called a "HELOC" or some other line of credit is irrelevant." But the bank guy doesn't necessarily know what you mean. "Prime Equity Line of Credit" is not a HELOC. Underwriting, rates, terms, ... all different.
I expected to see something like your above post. My only suggestion (no hate posts, please, I'm trying to be constructive) is to avoid using the word HELOC when inside a bank... unless of course you mean getting a second mortgage on your personal residence. "Equity draw", PELOC, "LOC for rental"... anything but HELOC. My 2 bitcents.
Chris,
Interesting. Maybe, just maybe, the terminologies are a little bit different from your area compared to ours although they shouldn't. Here, we heard people use the terms Home Equity Loan (HEL) and Home Equity Line of Credit (HELOC) a lot either inside or outside of the banks. I do hear people using the term Line of Credit (LOC) here and there. I haven't heard the term Prime Equity Line of Credit (PELOC). The next time I'm going to Wells Fargo, I will ask them for sure about what terms are appropriate for each situation.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@Account Closed I used that term "Prime Equity Line" only because that's what's on the line tied to an investment property at online.wellsfargo.com This may be an old legacy Wachovia term... but it isn't a HELOC. Just don't ask for Pick-a-Pay because they may escort you out the door ;)
Point Pleasant, NJ · Member since 2014 · 21 posts · 1 vote
12y
I have a rental property with a HELOC. Its with Lafayette Ambassador bank, only downside is that the interest rate is 5.99 since its a investment property and that's with excellent credit. $500 in fees to open the line for $30,000. Max loan value is 75%
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
I just checked the statement from my Wells Fargo line of credit on an investment property, which originated with Wachovia prior to the merger with Wells Fargo; @Chris Martin is correct in that it is called "Prime Equity Line".
Semantics I guess, but it certainly fits what the OP was seeking ...
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
12y
Be careful when acquiring a heloc from Wells Fargo. If you default or don't pay them off after the 10 year initial draw period ,they come after you until you file bankruptcy. Interest rates have dropped the last few weeks. It might be worthwhile to do a cashout refinance to pay off the first and get cash out. The heloc are scarcer to find these days due to the mortgage meltdown of a few years ago. Many of the former high ltv equity lines went bust once property values declined. I am a mortgage broker. You can ask me questions about loans anytime.
San Jose, CA · Member since 2016 · 1 post · 0 votes
10y
Hello, I have Question about HELOC.
if i accept a HELOC on my rental property from one bank, can i apply with another bank with this same rental property?
i am not happy the union bank just approved for very low amount of HELOC.. thank you. i haven't tried Wells Fargo but I remember it declined my rental last year.
Real Estate Investor · Los Angeles, CA · Member since 2013 · 98 posts · 48 votes
10y
Anyone familiar with banks or credit unions in the Los Angeles area doing investment property Line of Credit for 75% or 80% LTV? Would love to get one but my Credit Union F&A Federal only does owner occupied.