Hi folks, I read some place that a lot of the foreclosures we are seeing have originated in prime minus loans,( I think that is the right term )and I am looking at obtaining a HELOC and they are quoting a prime minus line for 15 yrs @ 7.64 %. Is this something that will work for fix-up money ? What questions should I be asking ? Are there any surprises inherint in a HELOC ? Also they say in Texas they can only do 50 % LTV ? Thanks for your attention, Mike.

So are you saying that you are trying to obtain a HELOC on the property you are fixing up or on one property to fix up another? Either way, if you have equity, this is a good way to tap into it to obtain fix-up money.

In Texas, you are limited to 80% LTV on a cash out refinance, but that is only on a primary residence. Investment properties are not restricted by this rule.

Hi RJ, this is my homestead, it is paid off, I thought I could use it to have cash available with the use of a check, if the need arose, on a property that I was purchasing. I may not need to use it but if I do it will be there. I just thought the 50 % LTV should have been more and was curious as to why there were so many repo’s under the prime minus loan category ? One thing that I can’t understand is if I use it and turn a property quickly, paying the Heloc back when done, how is the lender going to justify allowing me that consideration and not make an enormous amount of money themselves? Are there hidden fees or something I am not aware of? Thanks , Mike

HELOCs often come with lower fees and close quicker (you get your money faster) then conventional loans.

If you are accessing this money on a short term basis, then I think you are heading in the right direction. If you don’t intend to pay this off in the short term, you have the following to consider:

a. Rate violitility.
b. FICO impact.


Scott Miller

Thanks Scott, it is tied to the prime minus .60 % and if used I can pay interest only until I want to pay the amount outstanding in total. I will be supplied with checks to use when I choose for whatever I choose. Being that I am very frugal I will be quitely aware of my vulnerability to over extending myself. Do you know of any drawbacks to using a HELOC? Mike


I opened a HELOC on my primary residence and did not use it for 3 months. Then bought a house with it and used the checks to pay for repairs. Sold the house and paid off the HELOC, no fees or penalties. They sent monthly statements with the minimum due of the interest only, just like a credit card bill. Nice and easy.

do any banks offer a heloc for a LLC owned single family ( $35k ARV

Hey music, that sounds great, that was what I was hoping for, something simple and uncomplicated ! ! Thanks for your contribution. Mike

Don’t forget to deposit your paychecks and/or any other cashflow into the HELOC even if you are going to write checks within a short period of time for your regular bills. The HELOC sees the deposits as a payment and at the end of the month when the interest is calculated, a lower average daily balance is used so the interest bill is as low as possible.

Maths gurus see this as an incredible way to use money cheaply. Not much of anything if HELOC with balance is only expected for a few months. Over time its huge. Don’t take a fixed/lock option otherwise you negate the benefit of the simple interest calculation of this type of loan.


Thanks Mark, I will not be using it for my normal bills. Mike