Real Estate Agent · Howell, MI · Member since 2016 · 25 posts · 1 vote
I've been searching for a potential BRRRR property in Metro Detroit. My buy option would be my HELOC which is on our primary residence. Currently it is at roughly 87k and 90% LTV. They offer up to 100% LTV which I'm going for now to have that extra cash available if necessary. If I recall the difference would be 4.25% @ 100% instead of 3.25 @ 90%, interest only.
My question is, will I run into issues trying to do a cash out refinance if I purchased a property with HELOC and I used up most of the 90 or 100% available to me? I'm thinking I would since I have the mortgage on personal and 90-100% used in HELOC. Could be leveraged too high? I suppose this also depends greatly on income coming in. I am a full time Realtor with more than 2 years tax returns.
Any thoughts? Should I not go for the 100% LTV? I do have cash available to use for rehab
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Travis Juntti I've had my $138k HELOC maxed out, 401k loans out on my and my wife's accounts, personal loan ($50k)... spent. Still managed to get refinances done. It really just depends on how much debt you can carry.
FWIW, Huntington denied me on three refi’s I was trying to do at once. That was fun. But I ended up getting them done through my usual guy who’s a badass. So your mortgage person matters.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
5y
@Travis Juntti the short answer here is - MAYBE. Because it depends on what type of loan you will get once you have the property. I would highly encourage you to get prequalified before you do ANYTHING...what if the numbers show that you need to adjust your offer or how much you need to leverage? Filling in the blanks will help us make an informed decision. And getting prequalified helps fill in the blanks that you are asking.
Generally speaking there are 2 main types of loans for investors: “Conventional” and “Portfolio”
Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans....but these have strong rules for taking cash out from a home quickly. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.
Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually a shorter term. Since there are over 8,000 banks in the US that means there are over 8,000 different portfolio loans. So it's really hard for me to speak about each lender here but sometimes they will have an issue and sometimes not. And those that won't might have really different terms on their loans. It's really subjective here.
So the important thing is to get prequalified. Then you'll know. Feel free to ask anything else if you need. Thanks!
Real Estate Agent · Howell, MI · Member since 2016 · 25 posts · 1 vote
5y
@Andrew Postell Thanks for the detailed response! I do understand conventional and portfolio loans, to a point anyway, I'm an agent not a lender! As for being prequalified or preapproved, I know at current that isn't a problem, I've actually refinanced twice last year with the rates dropping off a cliff.
Investor · Toledo, OH · Member since 2017 · 24 posts · 5 votes
5y
I would like to know are you looking for fixer upper? If so do you have contractors lined up to get the job done? What area in particular are you interested investing in? I lived in Detroit for years. I love fixer uppers
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Travis Juntti I've had my $138k HELOC maxed out, 401k loans out on my and my wife's accounts, personal loan ($50k)... spent. Still managed to get refinances done. It really just depends on how much debt you can carry.
FWIW, Huntington denied me on three refi’s I was trying to do at once. That was fun. But I ended up getting them done through my usual guy who’s a badass. So your mortgage person matters.
Real Estate Agent · Howell, MI · Member since 2016 · 25 posts · 1 vote
5y
@Cynthia G. I am looking for a fixer upper, although I'm not ready to take on a major project at this stage. I'm trying to stay within 45-50 minutes of where I live in Livingston County Howell/Hartland area.
Investor · Toledo, OH · Member since 2017 · 24 posts · 5 votes
5y
I would like to know are you looking for fixer upper? If so do you have contractors lined up to get the job done? What area in particular are you interested investing in? I lived in Detroit for years. I love fixer uppers
Investor · Hartland, MI · Member since 2013 · 60 posts · 6 votes
5y
@Cynthia G.I did a refi last year on 2 SFR and 1 duplex at the same time. Joe Randall, Mortgage One, is a good source I would recommend. He is also an investor and helps to make the process much more smooth with underwriting. 810-434-3327