HELOC on owner-occupied duplex??

14 Replies

Hi all, my husband and I are looking into doing a HELOC on our current owner-occupied duplex (we live in one side) to help fund a down payment on another duplex. Does anyone know a local credit union or bank that will fund a HELOC on an owner occupied duplex? I've called Amplify Credit Union, UFCU, A+ Fed Credit Union, Velocity and RBFCU - RBFCU will do it but the amount that they need for an appraisal exceeds the 2% of our available loan amount, so that's against the law. All the rest won't fund a HELOC on anything other than a single family. Anyone have any ideas?

Are you absolutely sure you want to do a HELOC, which typically has a variable interest rate, in an era of rising interest rates that will likely exaserbate the the HELOC's variable interest rate?

Austin Telco CU does HELOCs on homestead properties. Call them to see what their rates/terms/costs are.

But I think Beau made a good point above. If you know how much you'll need for a DP on your next property, you might just get a fixed rate 2nd mortgage HE loan rather than HELOC. HELOCs are good for short term projects where you're in and out of the deal pretty quick, and regularly paying the balance of your line off with the proceeds of sales or refis.

HELOCs also typically have balloons after 5 or 10 years, while you may be able to get a 30 years long low payments 2nd mortgage to maximize your cashflow from the new duplex.

Helocs are nice because you can take out or put back as needed vs doing a Texas Cashout A6 which stays on your title forever. 

Mixed bag of nuts but the other thing is that it is typically not a great idea to draw equity from your personal residence if you can avoid it. 

Can the property go private to RT Refi?

We are open to other options for financing a down payment, but just thought equity would be nice to capitalize on. Could also do a HE loan as well, but the trick is finding a bank that will do an equity transaction on an owner-occupied duplex, and who will also keep their appraisal costs to under $600. I'll give Telco a call in the morning to see if they will. 

@Danny Webber , what would a private RT Refi accomplish? We would need a cash out refi and current interest rates on mortgages are higher than our interest rate right now, so that's not a great option. 

My understanding is that private cash out refi on a homestead property would be illegal in Texas. The only legal cash out refi is a constitutional HE loan that is heavily regulated. Both the originator and the lender (actual lienholder) must be appropriately licensed.

Penfed credit union will do it. I have a HELOC with them and it is a locked in rate for 5 years. Any military experience and you qualify or you just tell them you have or will donate any amount to the Red Cross and your eligible.

I got mine for my personal residence, because I have over 4 investment properties, so I did not qualify for the investment HELOC but did for my personal residence. I don't think the rate would've been different. I have had my HELOC for about 9 months. I think the rate is 4.75 locked for 5 years and can adjust every 5 years.

@Joe Scaparra , thanks for the tip on PenFed! They will do equity loans for duplexes - and they will do both occupied and unoccupied, with a LTV of 90% as well. Lots of options there! $17 join fee for a membership to a military non-profit.

@Tim C. , the current interest rate for the 5/5 HELOC that Joe references is 5.25 for owner occupied (75% LTV) according to their website. They will do one for a non-owner occupied property at 70% LTV for 6.75 APR.

@Allison Stewart , were you able to successfully secure the Home Equity Loan with PenFed? I'm in the same situation, trying to get a home equity loan on my owner-occupied duplex for some debt consolidation.  Any suggestions or details on your experience are greatly appreciated.

@Eddie Garcia yes, we ended up doing a Home Equity Loan with PenFed as opposed to the HELOC. It suited our needs better. It was pretty straight-forward actually - not hard at all. We just applied, we had to pay for an appraisal (which we knew we would have to do), and they approved us for the amount we wanted. Took maybe a month - but it would be quicker without the appraisal.