Rental Income Disqualifies HELOC Refinance?

Question

Hello BP Nation,

My buddy is trying to pull out some equity from his house and told me that he because he received rental income from renting out his room that it disqualified him from using HELOC. He said he talked with three banks and found the same result.

I am a novice when it comes to the refinance, but I have seen forums discuss HELOC vs Conventional refinance and was wondering if it is just the certain banks he discussed with.

Any insight would greatly appreciated!

Andrew Postell · Answer

@Mike Taravella this is an interesting post because the banks mentioned here won't do those products in Texas at all.  I'm not familiar with Michigan but it might be different there too.  I have 2 suggestions:

• Ask this question in the Michigan forum. You might get better responses in that forum from some locals who can get you a bank that they have worked with.
• When calling banks use the term "Line of Credit" over HELOC.  Some banks will route you to the residential department if you say HELOC....and then if you ask for that product on your investment property they will say "no" even though another department will do it.  It's frustrating I know, but just use "Line of Credit" for better results.

Good luck!

Adam Horowitz · Answer

@Mike Taravella Limited banks will offer a HELOC on rentals. Wells Fargo is the biggest name that will offer HELOCs on rentals. Be aware that Wells Fargo offer a lower LTV on HELOCs in comparison to most others.

Have your friend PM me for more info.

Bo S. · Answer

Hi Adam,

Can you also PM me the other banks that’ll do HELOC zone a rental.

I know of only WF and PENFED, but haven’t had experience dealing with either.

Thanks!

Mike Taravella · Answer

Thanks @Adam Horowitz

I'll be messaging you as well because I have some equity in a property and want to become familiar with the process.

Thanks in advance!

Rental Income Disqualifies HELOC Refinance?

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