How to setup up a HELOC
Any one know of a really good guide for evaluating and setting up a HELOC?
Hey @Seth Matherne! I recently found a HELOC widget on Chase.com that makes it super easy for Chase account holders to apply for a HELOC and it even has a function to allow HELOCs to be converted into fixed rate loans after being generated. Seems like a pretty sweet setup and it has some crazy low fees. So, if you happen to have (or be open to having) a Chase account then it could be a wining route!
Good luck on the REI journey!
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Originally posted by @Seth Matherne:Any one know of a really good guide for evaluating and setting up a HELOC?
IT is very simple. First make sure you have enough equity in the house.
Then go to any bank and fill out application.
That’s all you need to do.
Some back will not even charge closing fee or loan fee.
Hey @Seth Matherne! I would consult with several local banks and discuss options. Ideally, an interest only, long term line with a high LTV
I realize every bank will have their own requirements, but has anyone seen any kind of an industry standard on needed equity or maximum amount of remaining mortgage?
Nope, no standard. I have seen as low as 60% "no doc" LTV at some places and up to 90% loan to value at others.
@Seth Matherne are you looking to get a 1st or 2nd position HELOC? Usually You should have at least 15-20% equity, which will be determined by an appraisal. DTI ratio under 45% and credit score at least 620.I'm sure it's not standard, just a general idea of what banks look for.
I like 1st position HELOCS for a variety of reasons. 1) it allows you to pay it down a lot quicker if you you structure it right. 2) It also increases your cash flow because you're eliminating the mortgage and you don't have to stick to the banks schedule. 3) You'll save thousands or even 10's or 100's of thousands in interest, again, only if you use it properly! Most banks push 2nd position only because it's less risk for them. Just wanted to share other options available to you. My wife and I used 1st HELOC's for our primary and rental properties that allowed us to get ahead quicker.