Going to a IRS auction next month and have my eye on a SFR. Went to my bank to ask about a HELOC on my rental SFR that I own outright.
They don’t do HELOC’s on investment property. They said most banks don’t. Is that the case do you think? How would you finance it?
Plenty of companies lend Heloc’s on rental properties. You just need to work with a broker rather than a banker.
Never knew that you could get a HELOC on a rental property. I have a 553 score according to my broker, and evertime I go into her office she wants another $40 bucks to run my credit again. My patience with her is running thin. I have a rental that’s owned free and clear and would like to pull some equity out to do some rehab on my second and third properties without going into my cash reserve. Any insight would be greatly appreciated.
Robert
Heloc’s on a rental property aren’t that hard at all. I managed to get myself one recently and it was in the mid 8’s. Went up to a little less than 90% LTV.
The best insight would be to find out why you have a 553 fico and fix it. That is basically not a good Fico. Also don’t pay your broker $40 to do a credit check on you. It’s like paying someone to shoot yourself. They run the check and they make your fico worse and you end up paying for it. Spend that $40 yourself and it doesn’t hurt your fico when you check your own records. Check out myfico.com. You also have to be careful you get the right fico, there’s some articles on bankrate.com which seem to say that some sites sell you a fico that’s 50-100 points higher than your actual fico.
Trying to stay within the thread subject here. Your fico score is calculated by Fair Isaac Company (FICO), other similar yet different scores are caluclated by Experian, Equifax and Transunion. They all have their own proprietary methodology but their scores are not exactly alike. Just be aware of this.
7 - what’s the best way to find out what credit reporting agency your biz CC reports to?
Wells Fargo will go 90% on a rental with decent credit. (620+) If your credit is in the 500’s I would possibly find someone to be on the HELOC w/you, even if their not on title. + WF will NOT charge you anything for the loan unlike a broker. But, if you are in Texas you may need to double check what I’m saying, I know that due to “homestead” limits, they may no be able to go 90% on a rental.
Just get a new 1st mtg on your rental, with your score 80/90% ltv seems realistic. Chances
are if you close in December you may not have a payment due until possibly February 07.
If you win the bid on the property then you have the cash on hand to quickly follow thru,
if not then look for the next deal with your avail cash. You can also payoff the loan if you
decide to if you do not find anything to buy. Just make sure that you get a loan without
a pre-pay penalty…
Thanks for all your posts. My credit score is so low because of a few accounts that are in collection, working on paying them off. Heard of read somewhere that a HELOC comes with a ajustable rate where if I obtain 1st mortgage it would be fixed ?? Spoke with BB & T (local bank) and Asst VP said could obtain a 1st on it for me. Not sure of interest rate yet, possibly 70-75% LTV if I can remember correctly. Going over to property Friday with contractor to get bid proposal, then will head back to the bank. Will keep you in the loop.
Robert
Just about any hard money lender will loan you up to 60% without batting an eyelash but it is a short term fix. They don’t like to make long term loans. With a 553, you are in the sub prime area (not hard money until you get less than 500) for sure. Get something that is fixed for a couple years and refinance out of it later.
I believe all fico scores are computed using the Fair Issaac algorithm. The different bureaus, Trans Union, Experian, and Equifax just tune it different which is why they get different results. Lenders throw out the high and low and use the middle score.
Consumer reports are different than the report a lender looks at. Sometimes to your benefit sometimes not. I’ve seen consumer
reports that are 20-40 points different than the report we use.
A prime lender will require you pay off the collections before you buy to make sure the collection agency doesn’t slip their lien in before the new lender can record a 1st. Sub prime lenders usually don’t care. Paying off your collections slowly wont change your scores until it is paid in full.
Generally speaking consumer debt counselling will do more to hurt your situation than help it. I have loans that would have got approved if they borrower had NOT enrolled in the counselling.