Home Equity Questions

[Mathew Zorn]

I went to my mortgage lender (PennyMac) to use their equity tool. My rental property is estimated at $141,000 and I owe around $126,000 on it. Zillow shows $126,000 (bought the house in 2010 and it dropped 4.1 percent) will lenders see the same thing and how can i tap into it? Im looking to tap into equity to start flipping houses and eventually get more rental properties after I pay off my credit card debt to lower my debt to income ratio, any advice would be appreciated!

[Jon Holdman]

If its worth $141K and you owe $126K you're at 89% of value. There's no equity there to tap. You're most likely limited to 75% LTV on a cash out refi, per Fannie Mae guidelines. The truth is that any equity above 90% of the value isn't real. A sale will consume 8% or more of your equity in transaction costs. You need a value north of $168K to have any equity to tap.