Help! Trying to pick the best HELOC option...

[Elizabeth Rose]

Hi BP community! After researching and talking to multiple lenders, I've narrowed my HELOC options down to my top 5. I'd love your help to figure out which one is the best one for me. I'm a bit confused as some lenders incorporate prime, others use 1-year treasury and others are offering a fixed rate...

This will be my first HELOC. The loan will be against my condo, which is my primary residence. I don't plan on holding a balance long term - I plan to pull money out as needed for use for the BRRR method.

1) PNC - max LTV is 90% (which would give me access to roughly $126k). They are offering prime + 1.86% fixed. 10-year draw period, 20-year repayment period.

2) Connexus - offering a max loan amount is $99k (so less money than PNC). Rate is a fixed 4.5% + 1 yr. treasury. 10-year draw period, 20-year repayment period.

3) Bethpage Federal Credit Union - max LTV of 85% (which would give me access to roughly $105k). Rate is prime + a margin based on the credit score and LTV (I don't have the exact rate). 10-year draw period, 20-year repayment period.

4) Spring EQ - max LTV of 97.5% (which would give me access to roughly $164k). Rate for 85-89.9% LTV is a fixed 6%. 90% LTV+ is a fixed rate of around 7.45%. 10-year draw period, 20-year repayment period.

5) Figure.com - offering a max loan amount of $130k. This would be a 30-year fixed-rate loan at a rate of 8.35%. They only do 4-5 year draw periods.

Just in case you're thinking of recommending PenFed or State Dept Federal Credit Union (SDFCU), I've already talked to them both. PenFed only offers a max LTV of 80% on condos, and I couldn't move forward with SDFCU because they weren't able to verify my identity online after multiple tries even though every other lender was able to (they told me the workaround is to go to one of their branches in Virginia, which I can't do).

Thanks in advance for your help! I really appreciate it :)

[Greg Scott]

The last three have high rates.  I'd go with #1 or #2.

Keep in mind that HELOC is best used as a short-term instrument. You shouldn't be holding for more than a few months with these until you can put in place permanent financing.

Before you sign anything, know what you can qualify for AFTER you have the HELOC. The HELOC will be factored into your DTI, even if you haven't drawn a dime. Its mere existence will likely reduce your ability to obtain permanent financing on rental property.