Home Equity Line of Credit

5 Replies

What's up BP! I am interested and looking for info about a home equity line of credit, to use for  a down payment on another home. I purchased a condo at 260k, rolled the closing costs in as well, so total is 275k. I currently owe 238k. I also did a full renovation, (top of the line everything, built-in fridge and dishwasher, marble backsplash and countertops blah blah blah). I did not get a formal appraisal but the comps are around 289k-310k (conservatively). Can I get use my home as collateral? Forgive my ignorance, I am new at this. How do I calculate how much equity I have, if any.

Your equity is the value of your property minus what you owe. For a Heloc your value is what the bank says it is, either tax appraisal or what an appraiser you pay $4-500 says...and the appraiser works for the bank. The bank wants you to retain 20% equity, so conservative value of your property times .8 minus what you owe is what they might loan you. Plus they may have to prove that at your income you can pay. Why not call your bank and get a ballpark?

Hi William! It's free to apply for a heloc (with the exception of a ding on your credit report), so you might as well apply. They will send out an appraiser to your place to determine the current value, which to me is worth the effort by itself. When I applied for a HELOC the bank offered a couple different options... ex. 70% of the equity for x amount interest, 80% equity for y amount interest. I did this process 2x and only 1 time I accepted the offer. Cheap money, though in worst case scenario and the home forecloses, you are still responsible in most cases for the HELOC. Best Wishes, keep us posted!

Thanks for the question William. I'm also looking into opening a HELOC with my bank. I've spoken to them a couple times about it and it appears to be pretty inexpensive money to borrow.

I was looking into a HELOC but was told today it can only be on my primary residence or a vacation home. I have a piece of income property that has four units and is totally paid off. I wanted the line of credit so we could use the equity should we find another income property. I'd prefer not getting a home equity line on my personal home as it still has a mortgage. Any ideas?

Hey BP team, 

Does anyone have any idea what a good interest rate range would be on an ELOC? Also, does anyone have any tips for searching for one. A lot of BPers say to go to a local bank. If I'm trying to use this money for a down payment on another property should I try and do BOTH the ELOC and the new mortgage with the same lender? First property is with Quicken, so I'm trying to get personal with a local banker in Phoenix Arizona. 

Thanks,

Brandon