Refinancing a HELOC

5 Replies

I have been working with my parents who have a HELOC on their first house. The goal was to use this for flipping. We have done one flip so far but deals are few and far between. My question is whether or not there is a way to purchase a multifamily rental with the HELOC and then in some way refinancing to conventional but in my name as to avoid the need for a down payment. Any advise would be greatly appreciated I can provide more details if need be. Thank you, Brian

@Brian Jones,

This is absolutely possible and, in fact, encouraged. It is somewhat of a twist on the BRRRR strategy, Buy/Renovate/Rent/Refinance/Repeat. It may be a little more difficult in execution though. I would develop a relationship with some lenders now in order to understand what their requirements are going to be and ensure you will be able to meet them. They likely will want to see some seasoning on the investment before they will lend so be prepared for that and there will be LTV, DSC, and personal credit requirements that you will have to meet.

Ed

Edward B. Thank you. I was going to approach the lender that they have the HELOC through just wanted to be a little more prepared beforehand.
Brian Jones the financing out of the heloc depends on the size of the multi family property and whether you will live there or not: -four or greater number of units mostly get done through commercial loans. In the DMV area, I have found between 65 and 80 ARV, and typically 15 years to pay back the loans. This cuts into the cash floor compared with a 30 year mortgage -three or less units can be done through a conventional loan. You will get the best deal if you live in the property as well. Some credit unions in the area are around 4% for a fixed 30!
Brian Jones the financing out of the heloc depends on the size of the multi family property and whether you will live there or not: -four or greater number of units mostly get done through commercial loans. In the DMV area, I have found between 65 and 80 ARV, and typically 15 years to pay back the loans. This cuts into the cash floor compared with a 30 year mortgage -three or less units can be done through a conventional loan. You will get the best deal if you live in the property as well. Some credit unions in the area are around 4% for a fixed 30 year mortgage at upto 90% ARV
@Brian Jones Buying with cash taking out via HELOC is the same as buying with Cash. You can do delayed financing on the purchase within 60 days at the purchase price/appraisal. If you are making improvements and want a new appraisal, then there will likely be a 3-6 month seasoning.

DO NOT go to the lender that you have the HELOC with. Most HELOC's have a clause that does not allow you to use the funds for investing, business, flips, etc. If they find out they can recall the loan.

Good luck.

Upen Patel, Mortgage Banker

VA, FHA, Investor Loan Specialist

National Lender, Federal NMLS# 1374243

Medium tfsb   fdic   eh   squareUpen Patel, The Federal Savings Bank | [email protected] | (571) 331‑5161 | http://thefederalsavingsbank.com/upenpatel | Lender # National Lender NMLS# 1374243