Bought property cash...mortgage or HELOC?

Question

Hi everyone.  I recently purchased a property for $90K got a HELOC and spent it on rehabbing it.  Now, my HELOC is tapped out, my FICO is doing down but the property is bringing in $2400/month and has been appraised at $155K. It's a multifamily property (duplex).

Should I refinance for another HELOC for about 100K or get a 30 year fixed?

Since my HELOC has been tapped, my FICO has dropped from 710 to 630.  Because of this fluctuation, I haven't been able to get another property, since I can't qualify.

Any advice would be greatly appreciated.  Thanks in advance for your time.

Bryan Hancock · Answer

Texas has crazy cash out refinance laws too.  You should speak with a broker before you develop any grand plans.

I refinanced a property with a portfolio lender in Austin recently and they were 3 orders of magnitude easier to deal with than Fannie/Freddie lenders right now.  The mortgage industry is still trying to digest all of the softball tax credit OO loans right now.

Uwe K. · Answer

I agree with Mike. Sounds like a big drop for that situation.

I once asked my bank about a refi with cash out, and they wanted to charge a ridiculous closing fee (points) just for that. So we went with a HELOC.

Mike V. · Answer

I would look over your credit report very closely - your score dropping 80 points just for maxing out a HELOC doesn't sound right.  I max out my 100K HELOC on occasion and have never seen my score fluctuate more than 20 points.

Jon Holdman · Answer

With rates at historic lows (does that sound like an ad?), you should refi into a 30 year fixed.  But you have two huge strikes against you:

1) Its difficult to get a mortgage with a 710 FICO, nearly impossible with a 630.

2) You need to own a property for a least a year before you can get a cash out refi.

You might try talking with brokers or lenders in the area of the property, but I think you're going to have a very tough time getting a good loan, or any loan.

Bought property cash...mortgage or HELOC?

Most Popular Reply