Hi! I have a quick question related to lending and HELOCs to tap into equity. I will be refinancing my duplex in Salem, MA (north of Boston) in the next few months to lower the rate and potentially pull some money out. Currently, I am living in a unit of the property as a primary residence. I have a quick question about HELOCS as I plan:
If I open a HELOC for an owner-occupied property, and eventually I move out of the property and rent to tenants, will I be able to draw on the HELOC once I am not living in the property and the property is fully leased up?
I appreciate any help on this.
Hi Devon, it will depend. I suggest you talk to a lender and happy to introduce one but my understanding is if you take the HELOC out when your occupying the property and draw on it before it turns into an investment property you're going to be able to pay that back based off of the agreeable terms. However when you move out, the lender can decide to pull back the HELOC or restrict you from taking anything else out against it. This does happen because the HELOC's available for investment properties are very different than the ones offered to owner occupants.
Congrats on buying a Duplex in Salem. We were hosting a meetup at Notch Brewery in Salem, pre-covid of course, now we're doing monthly virtual meetups, but we hope to get back there sometime soon. In my opinion Salem is a great market that has seen some great appreciated. Having built in equity to pull out for the next deal is a great place to be.
Hi Devon, regarding your specific question Im not 100% sure on that, however if you need a recommendation for a HELOC Lender, I got mine through Hanscom Federal Credit Union. They allow you to go up to 95% LTV if you want/need to go that high (I think they may even go to 100%). The interest rate of course will rise the higher you go with the LTV but having the option to go that high was great (I did mine at 85%), I also found the interest rates to be very competitive when I opened mine a couple years back.
The answer is yes you will be able to draw from the HELOC after you move. Banks just acre if you are living in the property at the time you took the HELOC out. I have done this several times myself. if you want more info send me a message.