Investor · Nashville, TN · Member since 2014 · 21 posts · 2 votes
I own a property free and clear that we just moved from 5 months ago. It is currently rented out. I have contacted a few lenders who say I am not able to obtain a HELOC or 2nd mortgage because I do not live there anymore.
Is there a way for me to tap into the equity? The home is worth about $150k and I am looking to obtain as much as possible for an investment.
You'll probably want to do what is commonly referred to as a cash out refi. I've done a lot of these with local banks. They'll do an appraisal and finance 70-80% LTV depending on the strength of your finances, etc. The local banks seem to have more capital than they have good borrowers to invest in. If you own a property out right, you shouldn't have a problem finding a lender. Expect a +/- 5% rate. They will all be arms and the lengths differ widely among lenders.
You'll probably want to do what is commonly referred to as a cash out refi. I've done a lot of these with local banks. They'll do an appraisal and finance 70-80% LTV depending on the strength of your finances, etc. The local banks seem to have more capital than they have good borrowers to invest in. If you own a property out right, you shouldn't have a problem finding a lender. Expect a +/- 5% rate. They will all be arms and the lengths differ widely among lenders.
You can definitely get a 30 year fixed mortgage on an investment property (not just an ARM). You can also get a HELOC (though expect a lower LTV vs the 30 year fixed). They key is that not every bank will offer either of these products on an investment property, so you'll have to call several before you find the right one for your situation - I had to go through 20 before finding one to offer the right HELOC on my properties in California.
Once you hit the 6 month mark, you should be able to do the following:
1 - REFI for a Cash Out REFI to get your current mortgage covered (replaced) and pull out any added funds up to usually 80% of your ARV.
2 - Get a HELOC on up to half (add 10%) of the remaining 20% (all equity)
Yes, these programs are available. Buying financing isn't any different than buying a new car...you "shop it", until you find the "financing" you want to drive forward with.
@Account Closed said. Stay with the smaller guys. All of the new banks/credit unions that I am talking to are smaller sized portfolio lenders. My first two banks were big national lenders, and its a flat out no, so try not to waste your time there.