Investor · Denver, PA · Member since 2015 · 193 posts · 55 votes
Hi All,
Does anyone have a recommendation for a good lender who will do a HELOC loan on a rental property, when the rental property has a mortgage with another lender? I'm looking to see what I would be eligible to borrow from a rental of mine to put towards the purchase of a rehab project. Thanks in advance for any advice or recommendations.
Does anyone have a recommendation for a good lender who will do a HELOC loan on a rental property, when the rental property has a mortgage with another lender? I'm looking to see what I would be eligible to borrow from a rental of mine to put towards the purchase of a rehab project. Thanks in advance for any advice or recommendations.
Hi Tim,
Is Regions Bank in the area you want to do business?
I got mine from them a year ago and was originally getting it on a rental in Maryland but they don't have a presence in MD, which is what stopped me from using that rental. But they will HELOC on an investment property. I spoke at great length with someone at a branch in my area who understood the investor in me. :-) She was very patient with me through the whole process. If you want her contact let me know.
Does anyone have a recommendation for a good lender who will do a HELOC loan on a rental property, when the rental property has a mortgage with another lender? I'm looking to see what I would be eligible to borrow from a rental of mine to put towards the purchase of a rehab project. Thanks in advance for any advice or recommendations.
Hi Tim,
Is Regions Bank in the area you want to do business?
I got mine from them a year ago and was originally getting it on a rental in Maryland but they don't have a presence in MD, which is what stopped me from using that rental. But they will HELOC on an investment property. I spoke at great length with someone at a branch in my area who understood the investor in me. :-) She was very patient with me through the whole process. If you want her contact let me know.
Investor · Denver, PA · Member since 2015 · 193 posts · 55 votes
9y
Thanks for the replies, I'm currently living in Pennsylvania so I'm not sure if Regions bank would work or not. I will definitely check them out though! @Max T. I've also heard good things about Univest as well from someone else recently, will check them out as well.
Rental Property Investor · Palm Bay, FL · Member since 2009 · 511 posts · 290 votes
9y
@Tim Porsche Hey Tim, I was told TD and Wells Fargo...I had a friend in my area go check both out since she was looking for a HELOC on her rental and she said their rates are pretty good.
Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
9y
@Tim Porsche: assuming you have enough equity in the home, why not just find a lender that we will help you pay off the current mortgage? Say you have about 40 percent equity in this property. Another lender can make you a loan based on 70 to 80 LTV. If so, you would end up with 10 to 20 percent that you can use for your rehabs.
If you are simply looking for a lender to be a junior lien holder, they will likely require you to pledge more collateral.
@Tim Porsche: assuming you have enough equity in the home, why not just find a lender that we will help you pay off the current mortgage? Say you have about 40 percent equity in this property. Another lender can make you a loan based on 70 to 80 LTV. If so, you would end up with 10 to 20 percent that you can use for your rehabs.
If you are simply looking for a lender to be a junior lien holder, they will likely require you to pledge more collateral.
There are pros and cons as to whether to just have a single loan, or to have a first and a second that is an equity LOC. Some of the pros for having two loans as described would be that there is no added payment due unless a draw upon the LOC is made, and that the payment on the LOC might be smaller (and thus better for cash flow) since it is typically interest only during the draw period.
I disagree with the need for additional collateral - the property will have sufficient equity to allow for the equity LOC, or the loan won't happen. I guess there could be such a thing as a blanket equity LOC, and that would be where the notion of additional collateral would come into consideration. But the OP did not mention having multiple rentals, so no point to talking about a blanket.
Notice I termed this as an equity LOC rather than as HELOC, as the lenders only do HELOC on owner occupied residences - so equity LOC is the lender term for a LOC on a rental.
I would suggest to the OP that he do a search for some of my other posts where I show how to calculate the maximum amount of LOC based on the CLTV and property value. Some people think that because they have paid on a 30 year mortgage for a few years that they now have lots of paid in equity, and will be disappointed to discover there is less of a maximum draw amount available than they had hoped for.
1. I actually glossed over the fact that @Tim Porsche wants a HELOC. So yes, it really depends on the goal of what you want.
2. The additional collateral can come into play at regional banks depending on your relationship with them and what the collateral is (e.g. blanket lien over your business assets, etc). But Steve is correct that it doesn't really come into factor in most cases.
3. Steve's last point is important to understand. Many folks do not realize how "front loaded" mortgages are.
Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
9y
Today Aliant Credit Union quoted me a HELOC for 4% fixed with an interest only option for 7 years then balloon payment or 180 months prin + interest.
Bethpage Federal Credit Union quoted me either 2.99% up to 75% LTV or 3.75% up to 90% LTV. This one is a variable month to month. Hasn't moved much in 8 years because it's .25 above the prime rate.
Teachers Federal Credit Union quoted me (last week) intro rate of 1.99% for 24 months up to 75%. I pay appraisal fee only. They pay closing costs but if I don't have a minimum ($5 K I think for 3 years) they'll charge me back the closing costs.
No broker I called handles HELOC's. You need to call around and compare what you want in a HELOC. ie draw period, fees, variable rate, etc.
Bottom line is to identify how you want it to work and shop.
Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
9y
@Eddie T. To my knowledge, does not matter what state property is in. I did not ask about llc vs personal. I did not specify primary or invest property but banker might have sssumed primary though we never discussed that.
Littleton, CO · Member since 2017 · 1 post · 0 votes
9y
I had a HELOC with Wells for 10 years. Since then we'd bought a new house and started renting the old The HELOC expired and we had to apply for a new one. Well Fargo dragged it out for months, kept asking for more documents, asking for documents we'd already provided weeks earlier, never admitting that we'd already provided the docs, the whole thing was very aggravating and fishy in retrospect. At the end they told us we'd need 6 months of reserves on both our primaries on both our homes. Which is ludicrous considering we have great credit, good jobs, steady rental income, and the only reason we want this HELOC is as back up liquidity. I'm ready to close all my accounts with Wells Fargo, F Them.