Second lien / HELOC question

[Ian Fisher]

Hi - have done a lot of real estate investing but find myself back to square one when it comes to financing primary residence. I have a first lien lined up at under 5% for 70-75% LTV. I could do up to 90% at 9.5%. In both cases non-QM / bank statement based, since as an investor my tax returns show negative AGI. >$2MM purchase price. Rationally it'd make sense for me to pay 12% or more all day long for the slice from 70/75% to 90%+ and my blended cost still comes in lower than 9.5%. Any ideas? Would need to be done as a refi, as my first lien lender has no issue with it but can't put it in place at closing (so we'd use cash and then refi back out soon after closing).

[Javier Mercado]

So I understand this correctly, your lender will not allow you to get a piggyback heloc at closing to supplement the downpayment?

Most nonQM lenders will have a combined LTV Max of 90% for a primary purchase. If loan amount is greater that $2M then likely 80-85% would be the max because the size of the loan.

I would shop around with some mortgage brokers and confirm the lender guidelines on CLTV.

If you're purchasing cash then refinancing (delayed financing), the HELOC would have to be done second after the first cashout loan closes, but you would have to also check seasoning requirements for getting a HELOC on a property just acquired. Some lenders require 6 months. Depending on your plan for the cash it may be worth getting as much as you can on the initial cashout and take a slightly higher fixed rate.

Hope that helps!