Home equity loan

[Michelle Sharko]

I'm looking to get a HELOC on my second home which I've only used for a few rentals, it's basically our vacation home.

It’s in a trust there’s no mortgage value $650-$700 wanted to take out $150,000 for renovation and down payment on another rental. 
I’m wondering good idea bad idea? How hard is it for a person with high credit score but no income, retired to get a loan? Have some income coming in but not from a job. 

[Carlos Valencia]

Hello Michelle, 

In order to qualify for a Heloc you will need to qualify just like you would when applying for a regular conventional loan. Meaning its a full documentation loan and you will need active income to qualify and only can go up to 50% debt to income ratio. If you meet those criteria then you can try to apply. Typically for investments you can go up to 75% of the homes value. But in order to go up that high you will need to be able to qualify. You did mentioned you do not have active income so the other option would be doing a cash out refinance to get money out using a Debt Service Rental Ratio loan. If you meet the guidelines you can potentially cash out up to 75% of the properties value. The way to qualify is we use the rental leases and divide that by the proposed mortgage payment to calculate the rental ratio. If your ratio is 1:1 or better you most likely will be able to get 75% of the value for the cash out plus better rates. Anything below 1:1 will limit how much you can take out and will have a bit higher rate. 

@Albert Bui @Matthew Kwan