I have a house that sits on 18 acres and it is my primary residence. It is all paid for and I was wondering how to go about getting a HELOC in order to fund deals. I was orignially going to save cash through wholesaling and then phase into buy/hold, which is ultimately my overall goal. Now, I still want to wholesale becasue I really like it, however if I could get a HELOC and use that to fund a deal to create cash flow that would be awesome. How do I get an HELOC? What qualifications are needed, paperwork etc. If I have this asset right at my fingertips then I really want to capitalize on. Any advice, tips, suggestions and recommendations would be greatly appreciated!
Lucky for your there is a lot of info on HELOC's on BP & the internet. Yes it sounds like you can get a HELOC and most lenders will limit to about 75% LTV but every lender is different. I suggest seeking local lenders like Credit Unions, Small Banks and shop around....
You will be surprised how each one is different and eventually you will find one that fits your needs. Please check out the links below to maybe gain some insight.
A couple blogs on HELOCs
a couple forums on HELOCs
Congrats for paying off your primary home!! I would advise to shop around with your local credit unions and local banks. Call up any of those lenders and ask them if they have a deal going on for HELOC. These are the basic things lenders would differ in -
- interest rate : Your interest rate will probably be structured around the prime which is 3.25% right now.
- maximum amount of your house equity : How much of your equity would they let you take out, and if their interest rate differs for different amounts.
- closing costs : if the bank would pay for the closing costs. It is generally much lesser than the closing costs you would pay if you refinance.
- payable date : ask them when would the loan would have to be payable if you are doing an interest only loan. I did an interest only loan to increase my cashflow, another option you can explore if it suits your needs.
You will get better deals with the local banks. Every bank is different so ask in detail.
To give you an example Coastal Federal in NC offered prime + 0,25 = 3.50% interest rate upto 50% of house value, 4% for next 50% to 70%, and I believe 5 or 6 for upto 80% of house value. They would cover all the closing costs.
On other hand Bank Of NC had a special going on for 2% interest rate upto 85% of the house value for one year, and prime rate (3.25%) after one year for the rest of the life of the loan. They would not pay for the closing cost which was around 400$-500$.
I hope this gives you some information to get started.
Thanks you guys! I will start investigating in the morning. What do you mean interest only? Sorry just still very new to this concept. I will definitely anlyze well before I go further--I am in no hurry to owe anything to a bank unless I am fully aware of the ramifications. Thanks again!
@Ashley Guzman Interest only means your monthly payments will be the interest only, no principle loan amount pay down until after a specified time frame.
- An interest-only loan is a loan in which, for a set term, the borrower pays only the interest on the principal balance, with the principal balance unchanged.
I just got a HELCO against my primary residence from BBT. Pretty good terms: $10k with interest only payments, 4.49 interest rate, closing cost of $142. If I had qualified for over $25k the rates would have been better.
The process is just like applying for any other loan except that a HELCO is secured by your house. I had to fill out a personal financial statement, provide 2 years worth of tax returns, and they did what they called a drive by appraisal on my home, Process took about 2 weeks from start to close. Very simple.
Since you do not have a mortgage on your primary home you will not have any problem qualifying for one. Just shop around for the best rates.