how to get home equity loan

Question

Hello i have a quick question how can i get a home equity loan/credit on my home if it is fully paid off? well my mother owns 3 homes. and they are all fully paid off i would like to get a loan on one of the homes i looked online it it said the value is not worth much maby 50-70k? but in order to qualify for  a home loan will someone have to come and look at it and inspect it in order for it to pass what types of things do they look for?

John Warren · Answer

@Frankie Betancourt if the home is owner occupied you have two options. You can either do a cash out refinance, or a home equity line of credit. The line of credit acts more like a credit card in that you can use the cash to fuel your investment, but you have a period where you can (typically anyways) pay interest only. The cash out refinance starts the clock on a new 15 or 30 year mortgage.

If your mom has several investment properties paid off, she will most likely need to do cash out refinances. It is possible to do lines of credit through local banks, but you may find it simpler to put new debt on them.

One last thought would be that you/she could also sell the properties and trade up into apartments or commercial. This is the basis of my goal. I don't plan to hold all my properties forever, and instead plan to sell them and trade up into larger apartment complexes over time.