All Forum Posts by: Kerry Baird

Insurance is sufficient.  

@Jennifer Worthington, Welcome to BP.  Hope to see you posting questions or successes on the forums.  

Thanks for posting.

I'd reach out to a VA lender and see what they tell you. It looks to me as if you tick all the boxes.

Consider posting in the STR forum, for more eyes on your question. This is my slow part of the year, and I do all the things to move the algorithm…fiddle with order of photos, change seasonality in my photos, tick as many boxes as I can, fiddle with pricing.

Is the house rented?  

HELOC is best for short term money, because the interest rates are adjustable, while the second mortgage is a fixed rate for a period of time. I like them for an emergency fund, if I have over-runs with a renovation. I prefer this to using one for a down payment. Impossible to tell which would benefit you most.

I have found that lenders value the house in different ways; one is a full appraisal and the other is an automatic valuation…my credit union did a "drive by" valuation. Figure offers a quick HELOC, which we thought we'd get…but our DTI (debt to income) was too high. We also used PenFed for a HELOC, and that went well.

Tips: pull your own FICO score and call the local community banks and credit unions near you and ask what rates and terms they offer with a FICO like yours.  Make a table and compare, as interest rates and years of fixed vs variable rates will be all over the place.  Navy Federal has the longest draw and pay back period I have seen, whereas my local credit union has a very short draw/repayment period.  

Figure out what works best for your own situation.

You must have money to service the debt on the property you do have, and to cover emergencies.  Do not consider investing right now.  —> Ideas to get cash: Save, sell something, borrow against your retirement account, work another job, ask for seller financing, start a side gig and grow that.

HELOCs are very much a short term product, because the interest rates can go up precipitously, they have been called due in past credit crisis situations.  I like to have one as a safety net or emergency fund.  There needs to be a plan to pay the line under a range of interest rates, and to pay it off.  

There is risk in pulling cash out of our own residence, and there is risk in pulling cash at a high interest rate out of a rental.  If I know I have a great fix and flip deal, I might consider using one for the short term; do the reno and pay it off again.  

Cash out refi.  1031 exchange (sell and reposition).