Need help using HELOC to buy investment property

[Albert Johnson]

Hi I am new to this. I am currently in the process of getting approved for HELOC. My question is can I use HELOC to put as a down payment towards another property even if my HELOC is less than the property I want to buy? Would I need a second mortgage?

as an example the home is $200,000 and HELOC $20,000.

Also when do you normally make an offer on the property? I haven't gotten the HELOC yet.

thanks in advance 

[Carini Rochester]

Second question first: Get the HELOC approved before making an offer since you need the funds from that to be in a position to make a down payment.

Then, on the mortgage for the new purchase, you application will show that you are using the HELOC to partially fund the next property. Make sure your banker/mortgage agent knows that now (or ASAP) in the pre-approval process. Make sure your lender is on-board with this. The HELOC will impact your total indebtedness and your debt-to-income ratio. The mortgage for the investment property should probably be a debt service type of loan, rather than a debt-to-income loan.