All Forum Posts by: Doobie Sims

I currently have a $75,000 HELOC on my primary property that I've used for investing in properties using the BRRR method mostly. I opened up this HELOC about 3 years ago and now the market price for my house has gone up significantly. So, I've talked to my bank about upping my HELOC through a new appraisal. However, the kicker is that I have to go through the whole process again with the paperwork and ultimately the dreaded closing costs estimated to be $1500-$2000. The great thing is that I can take my $75,000 HELOC up to roughly $150,000. So, it seems that it is worth the closing cost investment to have access to all the equity in my property. My question is: Has anybody every been able to just have your HELOC reappraised and not have to go through closing to avoid the closing costs? Any and all advice and opinions are welcomed. (by the way, the HELOC follows prime rate)

@Caroline Gerardo My HELOC is on my personal property and I've used that HELOC to purchase this investment property. The house was purchased for $126,000 and after renovations should appraise for around $210,000. The delayed financing exception states that you can cash out refinance for the LOWER of what you paid in cash or the LTV of the appraisal. In this case, mine would be the $126,000. Here is the wording from Fannie Mae:

"The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)."

My HELOC is set to Prime rate (8.25%) for the draw period. I'm just wondering if I should stick with my HELOC for another 4 months, or go ahead and pursue the delayed financing route.

@Andrew Postell Wow I really appreciate that response! You offered some really good advice there. Yes, this is a single family residence. It will be my second investment property and I want to have it on a mortgage for sure as you were saying. I guess my question is wether I should pursue the delayed financing, or wait roughly 6 months to go with a more standard cash out refinance? No matter what I will be cash out refinancing the property and having a mortgage of roughly $118,000 on the property. I'm just wrestling on if I should pursue that now through delayed financing, or wait roughly 6 months. Thanks!  

@Doug Smith appreciate the response again. I'm located in South Carolina. The house was purchased all cash for $126,000. Under the Fannie Mae guidelines of delayed financing you can receive a cash out refinance of the LOWER of the purchase price and closing costs of the property, or 70% LTV of the appraisal. In this case, the house is going to appraise for around $210,000 so the LOWER of the 2 going the delayed financing route would definitely be the $126,000 that I paid for it. So, all of that is factoring into my decision that in need to make in the next couple weeks. Thanks!

@Doug Smith I appreciate your response. My HELOC rate is at Prime which is 8.25%. In regards to the renovations, I'm only about 2-3 weeks out from having the property ready to rent. So, the renovations are almost done. With them being almost done, that is one reason I wanted to pose this questions of should I wait and continue to pay the HELOC or go ahead and pursue delayed financing? The 6 month mark for me would be in October as to when I could get the cash out refinance. I purchased the property for $126,000 and I only want to have a loan of about $118,000. So, doing the delayed financing option to get the amount paid should be no problem since I only want a mortgage of $118,000. I will be trying to use a government loan on this investment property to get the best possible interest rate. So, I guess the question to myself is: Is it better to pay the high interest on the HELOC right now with the possibility of mortgage rates going down?

The property should bring in $1700 - $1800 in rent. My HELOC payment is $613 per month. Mortgage would run about $900 per month. Thanks!

I'm looking for some advice on the whether I should hold on to paying my month HELOC payment of $613 a month for a BRRR property, or should I go ahead and pursue delayed financing?

I purchased a property ALL CASH for $126,000 ($73,000 HELOC used) about 6 weeks ago that I'm going to end up putting right at $25000 of renovations into to turn around and rental looking to get $1800 per month. So, I know that I eventually want to cash out refinance so I can pay a FHA mortgage on the property. Looks like a mortgage right now will run me about $850-$900 per month not escrowed. With rates being so high right now, would it be best to wait and keep paying on the HELOC or go ahead and pursue delayed financing and get a mortgage and my money back on the property ASAP?

@Alex Bekeza I appreciate your response! I like the option of using a DSCR loan, but I would still ideally love to use delayed financing for this deal due to this being my second investment property and would like to have my first several deals be FHA loans. My lender feels confident that I would be able to receive the gift fund of $40,000 back as a part of the cash out refi. I just need the $75,000 HELOC and $40,000 Gift Fund back and want to try to ensure that I do get that back.

@Harjeet Bhatti Would I be able to cash out the gift fund after a time of seasoning? After seasoning, it seems like the gift fund wouldn't necessarily have to be declared as a gift.

Thanks!

@Harjeet Bhatti So, I'm using $75,000(heloc) + $40,000(gift) + $10,500(cash) to purchase the home for: $126,500. I'll be using another $20,000 to renovate the property. The house should appraise between $200,000 - $220,000. So, I know through the delayed financing, the lower of the LTV or purchase price + closing costs is what you can get back in cash. Therefore, I know the lower will the the $126,500. So, what you are saying is that I will only be able to cash out $85,500? The gift cannot be reimbursed through the cash out refinance? If this is the case, it seems I should look at 6 months of seasoning to do a standard cash out refi?

Appreciate your response!

I am closing on a BRRRR property that I have purchased all cash and plan on doing renovations using $75,000 in HELOC, $40,000 in gift fund, and $30,000 personal cash. This will be my second investment property, and my first property using all cash. So, I'm somewhat new to the game. I've done A LOT of reading through the forums and through the Fannie Mae guidelines about Delayed Financing. I'm really wanting to get my HELOC paid off asap with it being at 8% interest. So the delayed financing has really been something I want to do. Through talking with my local lender who I've dealt with the one snag it seems I'm running into is the gift fund of $40,000. Fannie Mae states that you cannot use a gift fund to purchase an investment property. However, with delayed financing this seems to get a little tricky. Since the purchase was in all cash, does Fannie Mae count the gift fund to be toward the delayed financing process even with it being an investment property? Any and all help/advice will be greatly appreciated!