I have 3 HELOCs with TD Bank and one with a credit union. I have a good relationship with the bank, and yes, the loan is callable but most are for whatever reason. Brendan, what do you mean by temporary? Mine are 20 year terms. Banks don't want the loan back, they want the interest payments.
My last 3 HELOCs were on properties that we paid cash for. The first HELOC was on a property with a first mortgage. The HELOC origination fee is $99 with TD Bank. We plan to hold the properties for at least 10 years. If the rates start to climb (they're in the mid 4%'s now) we can turn them into fixed rate loans.
It really is going to depend on your plan for the property. What is your exit strategy? I plan to buy and hold most of my properties so I pay the fees and get 30 year conventional financing when possible. Shop around some smaller local banks and see what they can offer. If you only plan to own it a couple years a HELOC may make more sense for you.
I was hoping to do the same, but just heard from my credit union that they can't do a HELOC unless there is a first mortgage in place. Isn't that hysterical? "We can't lend to you unless you already owe someone else..." sigh. I'll keep looking
I was hoping to do the same, but just heard from my credit union that they can't do a HELOC unless there is a first mortgage in place. Isn't that hysterical? "We can't lend to you unless you already owe someone else..." sigh. I'll keep looking
Why not just get them (credit union) to place a small first mortgage, and then do a HELOC with them as well?
Keep in mind that a HELOC is, by nature, a temporary and callable loan. Meaning that they could feasibly demand the full loan back at any time. Personally, I would be comfortable using a HELOC for short-term home flips, etc, but not for the down-payment on a buy-and-hold strategy. Just my $0.02.
I have 3 HELOCs with TD Bank and one with a credit union. I have a good relationship with the bank, and yes, the loan is callable but most are for whatever reason. Brendan, what do you mean by temporary? Mine are 20 year terms. Banks don't want the loan back, they want the interest payments.
My last 3 HELOCs were on properties that we paid cash for. The first HELOC was on a property with a first mortgage. The HELOC origination fee is $99 with TD Bank. We plan to hold the properties for at least 10 years. If the rates start to climb (they're in the mid 4%'s now) we can turn them into fixed rate loans.
How do you convert your variable HELOC's to fixed with TD? Don't you have to go through the refinancing aplication all over again and then deal with potential issues/costs.
I shouldn't have just made a blanket statement because it certainly can be different for every bank. On the occasions that I've spoken with my bank (BoA), HELOCs are issued at a set level, say $50,000, but can be changed very quickly. Imagine a scenario where you sank the entire HELOC into a property downpayment but wake up one morning to a letter saying your HELOC has been reduced to $25,000 and you need to come up with the difference. That is what I meant by the 'temporary' statement. The main thing is that with a HELOC, you are now including your primary residence into a business venture. If the worst happens, I don't want them having a right to the house my wife and I live in. To each his own.
My HELOC is, and will, only be used for a cash buffer incase I get into unexpected costs associated with rehabs. If I find out I need a costly foundation fix that wasn't budgeted, your write your HELOC check to cover it, and pay it back in full upon close of the property. Again, each investor has his/her own comfort level.
Build a relationship with a local bank with only a couple of offices. They will be much more likely to lend on a relationship. (few and far between) The big national lenders change their programs too freakin much to keep up with! Just my opinion! :mrgreen:
P.S. I personally like to keep things free and clear! Why even pull coin? Flip stuff to make money to buy more free and clear, you will not be sorry!
How do you convert your variable HELOC's to fixed with TD? Don't you have to go through the refinancing aplication all over again and then deal with potential issues/costs.
A feature of many HELOCs is that you can get a one-time conversion of the variable rate debt into a fixed rate debt. Since the debt already is in place due to prior draws on the HELOC, it makes little sense for that lender to go through extensive underwriting at that point.