Has anyone been successful in getting a HELOC in the past 1-2 months? Just curious, I am hearing banks are tightening up... wasn't sure if I should go and get a HELOC on my primary home and be successful. DTI is 23.5% currently before any additional loans. Looking for a $80K+ HELOC for a property estimated at $350K.
Lender · Springfield, MO · Member since 2020 · 351 posts · 504 votes
4y
Hi Tam! I just closed on a HELOC for my primary last week. They are definitely still out there. I would also suggest you look at the lock out period. Many banks in the process of tightening up are only allowing you to draw funds for 2 years, and then anything out stays out, so you lose the line of credit aspect. If this is important to you, really ask about the terms of the loan and how long you have to use it as a line of credit. The HELOC amount will depend on the amount of the loan you already have on the property and the upper limit as a percentage of the value of your home. For example, if the lender will do 90% of the home's value, they will allow a combined loan total (including a first mortgage if present) up to 90% of the $350k, so $315k. Depending on what your balance is for any other liens on the property, that will dictate how much you can take out. So far 90% is about the highest I've seen as standard practice for HELOC's on a primary residence, there may be some outliers in there somewhere that would go higher, but I think banks are baking in a bit of a downturn right now and like you have experienced, tightening up their loan portfolio to weather a storm.
Lender · Springfield, MO · Member since 2020 · 351 posts · 504 votes
4y
Hi Tam! I just closed on a HELOC for my primary last week. They are definitely still out there. I would also suggest you look at the lock out period. Many banks in the process of tightening up are only allowing you to draw funds for 2 years, and then anything out stays out, so you lose the line of credit aspect. If this is important to you, really ask about the terms of the loan and how long you have to use it as a line of credit. The HELOC amount will depend on the amount of the loan you already have on the property and the upper limit as a percentage of the value of your home. For example, if the lender will do 90% of the home's value, they will allow a combined loan total (including a first mortgage if present) up to 90% of the $350k, so $315k. Depending on what your balance is for any other liens on the property, that will dictate how much you can take out. So far 90% is about the highest I've seen as standard practice for HELOC's on a primary residence, there may be some outliers in there somewhere that would go higher, but I think banks are baking in a bit of a downturn right now and like you have experienced, tightening up their loan portfolio to weather a storm.
Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
4y
Hi Tam,
People are still utilizing HELOC's. We just completed one for a borrow this past week. Max CLTV I have seen working at the mortgage company was up to 97.5% and min draw amount being $50,000 & max being $500,000. If you shop around the market you are in, you'll be surprised on what lenders will be able to do for you that is within your best interest!
Sorry I didn't provide all the relevant information... the HELOC will be my primary lien. That's good news, I went through one lender and I wasn't denied but basically they weren't going to entertain me, even after I provided all relevant financial documents. My assumption is HELOCs don't make any money for the lender, therefore its not in their best interest which is understandable.
Good point on understanding the terms.. I didn't think about that. I do know HELOCs are higher than the market mortgage rates and are variable which is fine by me.
Lender · MD · Member since 2022 · 21 posts · 10 votes
4y
@Tam Tram the traditional and popular method of going to a credit union or local bank is getting tough as the Cumulative Loan to Value ratio (CLTV) is decreasing and tightening as you mention. We used to direct our clients to credit unions because the prime was so low and it was much favorable (during the refi boom) for our clients. Now, going with a mortgage broker who has a HELOC investor relationship is your best strategy. For example, one of our HELOC investors provide up to a 97% CLTV HELOC on a primary residence and 90% CLTV HELOC on second/investment properties.