Hello, thank you for taking the time to read this. I was inquiring about a HELOC through my investment property not a primary home. Is there anyone in the Milwaukee area that offers that?
Lender · Denver, CO · Member since 2017 · 160 posts · 72 votes
1w
Jeanette, it can be done, but it's a much smaller market than HELOCs on a primary home, so expect to shop around. A lot of big banks don't offer them on investment properties at all. The ones that do tend to be local banks and credit unions keeping the line on their own books, so a Milwaukee-area credit union is a good first call. A mortgage broker also will have access to HELOCs on rentals. You won't find a HELOC to 90% combined loan to value on a rental, this much I can say.
Set your expectations on leverage. On a rental, most lenders I've seen cap combined loan-to-value somewhere around 70 to 80%, and 90% is not likely. Rates are usually variable and priced higher than an owner-occupied HELOC, and some lenders want to see reserves in the bank.
If the HELOC options come back thin, two alternatives are worth comparing. One is a cash-out refinance on the property, either conventional if your income supports it or a DSCR loan if you'd rather qualify on the rent. The other is a closed-end second mortgage on the rental, which some non-QM lenders offer. A cash-out refi replaces your first mortgage, so if your current rate is low, the second lien or HELOC usually wins even at a higher rate. Run the blended cost both ways.
What's the property worth and what do you owe on it? That will tell you pretty quickly which of these makes sense. I am a mortgager broker, and the rate on the existing first mortgage is usually what decides this one.