All Forum Posts by: Ibrahim Yamini

I've been trying to get a HELOC but nowadays they are few and far between so as of now I'm settling for a cash out refinance.

I currently pay $1487 a month for everything regarding my primary residence.  My current interest is 4.25%

Loan company A says I can get $60K cash out and the new mortgage will be 2.9%.  This will raise my monthly mortgage to $6 extra dollars a month.  Keep in mind that if I were to get a $325K house, that’s the entire deposit.  I still have to pay closing costs, appraisal fees, realtors and hire a property  manager.

Loan company B says I can get a $100K loan at 2.5% and my mortgage will go up to $1700 a month (VA loan)

Loan company C says I can get $120K loan at 2.6% and my mortgage will also be $1700 a month (VA loan)

Loan company D is my current bank.  They say I can get a $100K loan at 3.25% but my mortgage will go down to $1K a month

D seems like a sweet deal, but won’t I be paying a lot more in interest down the line?  

Any advice on what the best options are?

Last year me and my wife had a not so great credit score.  Hers was significantly lower than mine and my real estate agent advised me that when I buy a second property, just have my name on it for simplicity.  It’s been over a year and I’ve reached the 760s and she’s in the 750 credit score range.

I’m finally in a position to acquire a second property and my wife said she wants her name on it.  I personally don’t want her name on the investment properties just so I can have a little more freedom of movement.  I want to be able to sell and refinance as I please without having to ask for her signature every single time.  It just seems like it will be a hassle.   I tried explaining to her that this is a business and I have to treat it as such but she wasn’t having it.

Am I wrong for not wanting her name on the investment properties?

@Brian G.

Thank you for your response!  I get asked the question about moving out of my current residence a lot, but I have no interest in doing that.

I looked at cash out refi, but if I'm not mistaken, the clock on the payback starts immediately. A HELOC doesn't start till you use it, which is what I would prefer.

As far as house hacking, it’s hard to find multiple units in my area and my focus is SFHs at the moment.

You did however, answer my question.   Thank you sir.  I’m going to look more heavily into HELOCs and maybe a lender with a better percentage grant like the one you mentioned.

@Alex Kovalenko

DANGER!!! WILL ROBINSON DANGER!!! AVOID THIS TENANT AT ALL COSTS!!!

I’m pretty sure this question has been asked before, but I wanted to be specific.

As I’ve studied books and members on this site, I think I have a better understanding of how to move forward but I need to make sure.

Based on a lot of your info, I might be able to do this.   Right now, I have a credit score of 763, my house is worth $371K and I owe $218K

If I'm not mistaken, I should be able to get a HELOC worth $78K

Based on the information above, will my bank allow me to get a loan for a second house up to $325K?
If so, I would then use the funds from the HELOC to make a small down payment. After that, I would use the rest of the HELOC funds to pay any closing costs and hire a property manager who can locate and lease tenants.

Finally, the tenant pays the mortgage, but I pay whatever I owe to the HELOC with my own money?

Once I pay the HELOC back I can do it again, for maybe 1 or 2 more houses before the bank says I'm over leveraged?

Is there a step I’m missing?  This concept just seemed too simple 

Also, I’m not sure if you’re allowed to post businesses but if this is the way to go, are there any lenders that would be good for this in the Phoenix area?

I figured buying outright was the way to go.  I guess I’ll have to wait a bit or look a little close at manufactured homes

I've been slowing getting myself ready to purchase a second property and it seems like a HELOC is the way to go. Unfortunately, the information I've been getting from YouTubers and other sources doesn't seem realistic to my situation.

For the sake of argument, let’s say that I’m able to pull $75K out of my house to buy a property here in Phoenix AZ where the market has skyrocketed.

There are people saying that you shouldn't use a HELOC as a down payment on a house, because then you will have to pay down the HELOC, your primary mortgage and the new investment property if you haven't already found a tenant.

Another option mentioned was to buy the house outright with the HELOC. Then take the money out of the investment property to pay the HELOC right back.

The other advice I've seen was that you should only use 50% of your HELOC. Which for this scenario would be $37.5K.

I can not buy a house outright for $37K in Phoenix unless it’s a manufactured home, which I have zero interest in because they don’t appreciate.

None of these options seem feasible for my situation because there aren’t any decent in homes in my area under $250K.

I guess my question is, how do I move forward? Should I use a HELOC as a down payment contrary to popular opinion? What's the next step if your funds are limited?

@Zach Wain

Thank you!

That’s why I love this website, it helps newcomers gain insight from others who went through these endeavors before, guiding them with critical information before jumping right in. All of your feedback has helped me a lot and now I have a better understanding of how I’m going to move forward.

@Grant Schroeder @Zach Wain

Thank both so much for your input.  I thought a conventional loan sounded better, but I'm confused where you got your numbers from.  If I took 80% out of my current home, it should be $119K, unless I missed something. 

V = $367K 

O = $218K

E 80% = $119K

I don't completely understand how all this works, but I've been educating myself for over a year and will be taking action as soon as I return home.

Keep in mind that I have no interest in moving out of my current house.  My entire family is there and it just seems like more hassle than it's worth at the moment.

Please let me know if I'm understanding this correctly.  I do a home equity loan and take out $119K and replace my current mortgage with a new one.  The $119K is mine to keep, because everything else is being paid back by the terms of the new mortgage.

Now, I can use the $119K to buy an investment property or two if I so choose.

The bank will have to approve me for another loan, for a $250K house, but since I have the $119K, I can easily pay 20% for a down payment, closing costs, hire a property manager to get a tenant and still have a decent amount of capital left over for other fees.

Then wait a year and buy 2 more houses with the Liquid and equity I've acquired.  I'm aware that banks will stop loaning you money for houses after a certain period, so I'll have to find private lenders after my 3rd or 4th house.  Also, I'm just looking at "Move in Ready" houses at the moment.  I have no interest in rehabs. 

Can someone let me know if I missed a step?

@Lynn McGeein  Thank you for your response!  You're right, I didn't calculate the interest for the mortgage payments in the other house.  But yes, the 20% down will come from the $134K I would be able to take out of my house.  The $18K will also come from the $134K and will act as a security blanket.

I'm in Phoenix and a lot of California folks are moving here, so I think you're right about vacancy.

My focus is this though; do you think I'm better off using my Home equity to invest in another property, or using the VA loan with no money down?

I personally think the option without the VA loan is more viable because it involves actual cash, but I wanted another opinion