All Forum Posts by: Zach Bosson

@Ismael Ayala Jr. - Unused debt does not impact your debt to income ratio. Otherwise everyone with open and unused credit cards would never qualify. Same thing with your HELOC, if it's a $0 payment, it's a $0 impact.

Not discouraging the purchase by any means, but food for thought: "There's no free lunch" if you're getting a below market rate from the builder that's getting paid for in the purchase price. Doesn't automatically make it a bad deal! But consider that if you buy an existing home at market rates you may get a more favorable purchase price, and either way 5.5% or 7% you'll be refinancing when rates drop.

 

@Ko Kashiwagi is correct.

Delayed financing is what you're looking for.

It allows you to borrow up to the amount of cash you used to buy the property, no more. This will be done as a "rate/term" transaction, so better rates than a cashout transaction. Be prepared to document where that cash came from - in your case, that's easy, your HELOC.

Would be happy to help you with that sort of transaction if you want to reach out - I find a lot loan officers are unfamiliar that this option even exists. 

Gosh Javier, I wish I could help you. I am heavily involved in the HELOC space and don't have any good ideas for you. Don't know much about lending in PR, do the big banks lend in PR?

Of course local might work, but sounds like you already started there. Not the best products, but PNC and Citi both have a HELOC you could check there.

@Jim Miller We offer HELOCs on investment properties, they are rare. The highest rate we offer is 13%, I don't know how you'd do a 15% rate, those coupons aren't selling in the secondary market.

It's not a one size fits all whether a HELOC or Cash Out is better. If you have a $500,000 2.5% 1st mgt and want $50k you'd be insane to choose Cashout over HELOC. Inversely if you have a $100,000 5% 1st mortgage and want $250,000 you should go with a cashout mgt.

Be careful, *some* lenders will discourage HELOCs b/c they make less $ on them or only offer them to get people's foot in the door.

Quick Example Scenario. 

$250,000 1st mgt at 4% $1200/mn

$100,000 HELOC at 10% - 12% $830 -$1000/mn

or

$350,000 $7.5% - $2,450/mn

Todd,

A Reverse Mortgage or HECM loan is an Agency backed mortgage that allows you to access a portion of your equity with no payment required, the interest you're not paying gets added to the loan. This is called reverse amortizing b/c rather than paying down your loan the loan increases over time. It's designed for individuals over 62 that want to stay in their home but otherwise can't afford to. 

We do offer bank statement HELOCs for business owners who don't show income on paper but can show revenue coming in(bank statements), doesn't sound like that applies here.

Freddie Mac allows for assets to be counted as income, 70% of total divided by 240. So for every Million you get $4167/mn to use as income. But again, 62 and older.
- Only allows Rate/Term but we could add a HELOC on top of it to access cash in this instance up to 95% CLTV.

Long story short, there are ways but you'd have to get creative and be over 62. 

Hi Rok,

We offer HELOCs on investment properties over at Lower.com - it is rare and we're a near National Lender. We're not a Quicken Clone, loan advisors are experts in all manner of programs, "blending technology with a handshake".

Quick highlights - 1-4 unit, business statement loans, down to 660 up to 90% CLTV and more.

Hi Dan,

We do over at Lower.com - it is rare and we're a near National Lender. We're not a Quicken Clone, loan advisors are experts in all manner of programs, "blending technology with a handshake".

Quick highlights - 1-4 unit, business statement loans, down to 660 up to 90% CLTV and more.

Agreed with @Jason Wray I am heavily involved in the 2nd lien market and don't know of any lenders doing HELOCs in the 3rd position. 

That said in these instances my clients will normally take out a new, larger 2nd position heloc, and pay off their old one, a refinance. Largest line I've ever seen is $500k so only $100k more.

Happy to show you what those #s look like if you're interested.

Zach

@Kyle Kline
Why not use the 15-20k in savings and lose out on the 5% interest instead of incurring 8%-13% on the HELOC?

In an emergency situation you could always access the HELOC at 8%-13%.

This emergency situation should be considered before the funds are accessed with either method, can you afford to have no savings AND be paying 8%-13%. Is the return on the use of the funds worth that risk? 

Questions to consider. But my rule of thumb is always use my cash before I pay interest knowing I can always draw later if I need to.

@Tonatiu Ortega that's my specialty, I'm very involved in the 2nd lien conversation(follow me on LInkedin for more!). If you'd like to connect to learn more happy to connect.