Homeowner · San Diego, CA · Member since 2013 · 26 posts · 4 votes
I want to get started flipping houses and since I don't have the capital to purchase a house yet I was informed that I could potentially open up a HELOC against my house to provide me the necessary capital to finance a flip.
I went to my credit union and inquired how much I can borrow. They told me they would let me borrow up to 60k taking into consideration my current house value. This doesn't sound right so I went to another bank and they wanted to run my credit again and setup an appointment to talk to an underwriter to figure out how much my HELOC would be. I decided against running my credit to much and instead ask here and find out if there is anything I should know before opening a HELOC. Are all banks going to give me pretty much the same credit line amount and interest rate?
@Robert M. Running your credit multiple times within the same 30 day window (as long as it's all mortgage related), all count as only one credit check. The credit bureaus understand that you'll be shopping around and won't ding you for it! Just be mindful of the date of the first credit check!
How did you arrive at your current home value? That will most likely need to be based on an appraisal or whatever value method the lender chooses.
Many lenders will go up to 80% LTV the current value, there are some that will go higher (with a little higher interest rate). You'll have to shop around. I'm refinancing my HELOC with US Bank right now, I believe they go up to 85% LTV.
Let's assume your home is valued at $360k.
$360k * 80% = $288k - $225k = $63k that they will lend you.
So the credit line amount the lender gave you sounds just about right.
I see that you're in the SD area, you're in luck. Mission Federal Credit Union does up to 100% LTV on their HELOCS. Membership is open to SD residents :)