I have an eye on a property that’s going for 85K, but needs repairs/rehab. The home is assessed for property taxes at 185K.
Assuming I make this property my primary residence, can I then turn around after purchase and get a HELOC to make the repairs? (Looking at about $50K).
Do HELOC lenders go by sale price, market price, assessed tax value or some other number?
How soon after I buy can I get a HELOC? Does the property have to season at all?
The property is “liveable” right now, but I’d want to get the repairs done fairly quickly.
It is different in different states. For example in Texas a homeowner can only borrow 80% of the value of their home using a HELOC.
Usually an independent appraisal is ordered or the loan company may have an in-house appraiser appraise the property. They will usually take into consideration the repairs to be done and adjust the appraisal accordingly.
How do you plan to finance the $85,000 purchase price. You may want to try to obtain one loan for both. Maybe some lender members will be able to help you with this.
What I would suggest is to do HML to rehab once completed turn around and refinance the property at the same time getting a HELOC…it will be a lot easier, as well as a lot less of a headache for you.
Texas is the only state I know of with the 80% rule.
I know for sure that Wells Fargo will do a computer generated appraisal only 2 or 3 months after purchase and you can use that value to obtain a home equity loan. They usually do them at no closing costs.
Most traditional lenders will go off of sales price for the first year, so you would not be able to obtain a home equity loan through one of these lenders until after one year.