Which Arizona Banks offer HELOC for purchase?

17 Replies

Hi all!

I'm super new, so please forgive my ignorance.  :)

I'm looking to purchase a home (as my primary residence) using a HELOC in the 1st lien position (so I can draw off the equity as I pay it off), however I am finding it difficult to find banks in Arizona that offer this. There is a company that offers to sell this list of banks along with support and coaching for $2,500. I'm not sure I need to spend this much to accomplish this. I'm using the handy questionnaire that some else posted to ask banks, however I've call about a dozen with no luck. I would love any assistance with this.

THANKS in advance!

Cynthia

Hi @Cynthia Andersen - I want to help you, but am having some difficulty understanding your question. Are you interested in applying for a HELOC, but don't know what banks to turn to in AZ? If so, I would suggest contacting local credit unions, as they typically offer low variable rates.

As for the $2,500 "supporting and coaching" classes, I'm also a bit perplexed by what that's all about, but I would advise against it just because it seems to be a ridiculous amount of $ for what sounds to be a silly course.  

Again, not sure if I'm on the right path with your questions, but hope I'm helpful somehow.  I remember when I was new to real estate investing and had difficulty phrasing my questions correctly :) Good luck to you!

@Cynthia Andersen I don't believe that is true. My primary residence in Gilbert, Arizona only has a HELOC. I first had it with Chase bank and then I moved it over to Wells Fargo. I was also considering moving it over to BBVA Compass but it is still at Wells Fargo right now. So I could name several banks that will give you a HELOC as a first position on your primary home. I'm not sure where you are having the trouble getting the HELOC.

@Shiloh Lundahl - thank you so much!  I think the confusion came into play because it isn't a refy, its for a new home purchase.  When contacting a few banks, they were confused if that was even possible.  Thank you so much!  Looking forward to meeting you on Wednesday!

I'm not clear on what you are asking.  I'm not as smart as @Shiloh Lundahl . Are you saying you want to purchase a home with cash and then take a HELOC on it? I almost feel like this is the chicken and the egg. I think I understand your intent is to use a HELOC loan instead of a convention/fha/whatever fixed rate loan so that when you pay down your equity you want to use it again immediately. I think if you were to get the house with cash, then there are banks that will give you 100% LTV on a heloc in which you can write yourself a check for the full amount. I'm not sure a bank is going to give you a heloc on something you don't own

@Cynthia Andersen I see what you are asking for now. You are right, I don't know of any banks that will do a HELOC for a purchase unless you own the home outright and want to refinance it. I think the reason is because the bank wants to know that you are going to be paying down the home over time which builds up equity and creates more protection for the bank over time. Even though when you boil it down, getting a mortgage for the first loan and getting a HELOC for a second loan creates the same thing that the bank may want to protect against, you are still paying on the first and that creates more equity over time. Therefore, I don't know why they would be willing to give a HELOC as a first on a paid off home but not create a HELOC for a first on a purchase if in the end it ends up being the same thing. You have me stumped. I guess you can chalk it up to another dumb thing that banks do that make no logical sense to the majority of people.

A "home equity line of credit" or HELOC is a product that loans against a property you already own and is securely and provably in your name already. A purchase loan will require a title search, inspection, appraisal, title insurance policy, and a new warranty deed, etc. HELOCs are simply not underwritten in a manner that would secure title in the way that purchase loans do as they are not designed for purchases.

  

Hey Cynthia, I have been a full time real estate agent in AZ for 7 years but I have never seen someone purchase a home with a HELOC. Typically they purchase the home with a loan and get a HELOC is secondary position or they purchase the home with cash and then get a HELOC in 1st position. Although I don't have an exact answer to you question I certainly wouldn't pay $2,500. I know a hard money lender in AZ that charges 12% interest with no origination fees and no minimum hold time. You could pay cash for the house, Get a HELOC and pay off the hard money loan? That should still be cheaper than the $2,500 the other company wants to charge you and maybe you can get a deal on a house by paying cash.

Although that doesn't directly answer your questions, I am sure there is someone on here that has the answer you are looking for. Good luck!

Thank you for all responses!  Here is the company I was talking about:

www.ReplaceYourMortgage.com

It is a method to pay off your mortgage very quickly, within 5-7 years.  They have a DIY program for $2,500 and one that holds your hand for $4K.  If I go this route, I might have to pay the hand holding option, since most lenders aren't familiar with the technique.  The overwhelming response has been that this isn't possible.  They are claiming it is.  I would hate to waste $2,500 just to find out.

@Cynthia Andersen You can pay off your 30 year fixed mortgage in 1 year if you just pay a ton into it.  I think the concept is that same.  I just don't see how having a higher interest rate loan pay off a lower interest rate loan makes any sense.  Ultimately you will have to pay off that debt, there really isn't a cheat around that.   

Originally posted by @Cynthia Andersen :

Thank you for all responses!  Here is the company I was talking about:

www.ReplaceYourMortgage.com

It is a method to pay off your mortgage very quickly, within 5-7 years.  They have a DIY program for $2,500 and one that holds your hand for $4K.  If I go this route, I might have to pay the hand holding option, since most lenders aren't familiar with the technique.  The overwhelming response has been that this isn't possible.  They are claiming it is.  I would hate to waste $2,500 just to find out.

The replace your mortgage technique means your whole mortgage is exposed to a variable rate, but you can accomplish the same thing by getting a traditional fixed rate mortgage and then getting a small ($10,000-$20,000) variable rate HELOC to complement it. You take "chunks" of the mortgage over to the HELOC and then use the HELOC like a checking account (bills out / income in) and it's gradually paid down over time. Then you take another chunk of the mortgage over to the HELOC and repeat the process. The end result is that you are putting all of your extra income against the mortgage, which is what actually accomplishes the early pay down. Please don't pay someone thousands for a program, I don't think it's worth it to do that. They are a bit of a scam, because it's simple enough to do on your own. If you can't get it figured out, though, just follow these steps to get similar results:

  1. Buy a house on a fixed rate mortgage.
  2. Set aside some money / savings for an emergency (and possibly get a HELOC as a backup in case you need it).
  3. Move all of your billing dates to the first week of the month.
  4. After all the billing dates have passed, take all the money left over in your checking account and pay it toward the principal on your mortgage.
  5. Let your income build up your checking for the rest of the month.
  6. Alternate between #4 and #5 for the duration of your loan.

I personally don't think this will be quite as effective as using the HELOC as a checking account like I described, but the math wizards on this website say it's basically the same thing, so for someone who is struggling to figure out how to implement the HELOC strategy this would be the way to go. Using the HELOC as a checking account is mainly a way to keep all of your extra income going toward your mortgage and if you do these steps it will accomplish roughly the same thing. Good luck which ever way you decide to go. :)

@Cynthia Andersen , I am very interested in knowing how your scenario played out. I am in the process of purchasing a home and want to use a HELOC to purchase. I have been studying this concept for several months now and it totally makes sense to me. It's very difficult to change someone's way of thinking. "They only know what they know". Please let me know what you ultimately ended up doing.

Thank you,

James

@Cynthia Andersen @Tanner Larsen @Clayton Coombs @Shiloh Lundahl
Hi all, I can provide some insight on this one! 
My wife and I got a First Position Heloc Loan, and I liked it so much that I left my job in Medical Sales to join a company that specializes in them! We're able to offer it for both ReFi's and Purchases, and we're licensed in AZ/CA/CO. 
It's a great option for investors, as it allows you to quickly pay down your principle, while retaining access to equity for 30 years! We're looking to have our investment property paid off in 4 years. Then we'll have the whole credit line available to purchase another property. When a good buying opportunity arises, we'll simply write a check out of our line and purchase in cash. The best part, each new property pays off faster than the last with the additional cash flow. With homes values so high right now, it's a great time to open one, and gain access to all that equity.