Keeping My Powder Dry – Seasoning Question

I have a fairly large home equity line of credit that I opened with the intent of using as part of a down payment on some commercial multifamily units. While I shop & search, I transferred about half the line into a savings account to season. This was five months ago.

At the time, I understood that the lenders will look at money that has been in a savings account for three or so months as seasoned, and consider it non-borrowed money for a down payment. This always seemed silly to me because it’s pretty obvious I could use it to pay back the HELOC at any time – or visa versa.

At an investor meeting last night, I was told by a commercial mortgage broker that he didn’t think it would matter. He explained that the lenders will look at the HELOC as cash in the bank and hit me for the equity line payment anyway. Thus, he said there’s no point in seasoning the money and incurring the cost.

The amount I am earning in the savings account is not enough to make up for the HELOC payments so I’d like to quite doing this. I don’t want to jeopardize any financing opportunities however.

What do you guys think? Thanks.

That actiually depends on the bank doing the loan. Some will allow a HELOC as a downpayment and others wont…

What is the interest rate on your HELOC???

Your best bet is to get a mortgage broker on your power team and tell him what you need to do. Depending on the loan product, you have loans that do not require any seasoning of funds as well. You have stated/stated loans meaning you do not need to show your assets. Therefore the downpayment is not seasoned many times. I use this loan alot since I do creative financing deals with the seller making my downpayment many times.

This is for a commercial deal – typically 10 to 20 multi-family units or maybe an office buliding. I know many banks will allow borrowing against a HELOC for a residential investments. I’ve heard conflicting comments about commercial though. I suspect that, as is usual with most loans, it will simply boil down to who the lender is.