I'm a newbie with just a couple of rental properties...Looking at expanding with BRRRR and need cash. One of the options is HELOC. Talked to a few banks/credit unions. The best rate I found was 4.24%. Is this good enough? have you seen better ones? Looks like most of them don't charge closing fees or application fees. But some of them charge a mortgage tax of a thousand dollars or 2% for every time you make a draw...Not sure whether the APR is the most important thing I should consider...Thank you for your help!
The best I found around Minneapolis was 5.25 so I think you’re doing well. I ended up with 6.25 so I get up to 90% of the equity. Just looking for the right opportunity now.
@Vivian Long That is a great rate however it looks too low to be effective. That rate is too low to be offered at a high LTV. This means you will get a lower loan amount and that you're leaving money on the table. If you take the highest possible rate this company can offer, you'll get the most money out which is going to be way worth way more to your you're investing than saving one-two percent on the interest-rate and getting $20,000 less cash.
@Ivan Widman good choice in this case the lower rate option would be a missed opportunity.
I agree, the HELOC I just got was 7%, but gave me a combined LTV of 95% with my mortgage.
I’m ok paying a little more in interest to have access to more capital.
Mine has one at 2 plus percent for a limited time good for the first year then about high 4's thereafter or could be 5.0 percent. I know it changes some from time to time.
Thanks for all the responses. Found another one with 2.9% for the first year, then 4 something after... 80% LTV... I started the application process already, but now with the responses here, maybe I need to rethink...
If you want a higher LTV I'd take a look at local credit unions too.
@Vivian Long Can you please let me know regarding HELOC -which bank will offer 2.9% for the first year, then 4 .. 80%LTV..
Start off by calling every local bank, community bank, credit union. Rates can vary a lot. Don't let them pull your credit until you have finished making your list. Also ask how the lender obtains value, whether by desktop underwriting or full appraisal. This affects the value. You will also want to keep track of the LTV on different products.
Honestly, anything you buy with the HELOC should be temporary. That said, I generally don't care about interest. I care more about buying power. The low interest rate likely will be accompanied by a lower line of credit. Go for the higher buying power if it's an option.
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