Does a HELCO count as mortgage

[Rich Vogel]

I am in the process of getting a prequalification letter to purchase a rental property. My mortgage broker is saying she has to wait for underwriting to get back to her cause she thinks that the HELCO will count as a mortgage. If she counts the HELCO  and the new loan my partner will be at 5. Her company only allows 4 mortgages so she thinks it will be a problem. Has anyone run into this problem.  Any help is greatly appreciated.

Thanks

Rich

[Chris Mason]

Originally posted by @Rich Vogel:

I am in the process of getting a prequalification letter to purchase a rental property. My mortgage broker is saying she has to wait for underwriting to get back to her cause she thinks that the HELCO will count as a mortgage. If she counts the HELCO  and the new loan my partner will be at 5. Her company only allows 4 mortgages so she thinks it will be a problem. Has anyone run into this problem.  Any help is greatly appreciated.

Thanks

Rich

 Fire that loan officer, find a new one local to you that is actually investor friendly that works for a company that is investor friendly. No lender that caps you at 4 financed properties is investor friendly. That policy alone is enough to tell you that they don't want your business, and is a huge red flag that you will face trouble once in contract and in underwriting. 

To answer your question directly:

Of course a HELOC is a mortgage. I mock any lender saying they need to even ask that question! That's like a baseball player asking if a catcher's mitt that fits on your right hand still counts as a catcher's mitt. 

However: it may or may not count in the "number of financed properties" total. A property with 2 or 3 or 50 mortgages on it counts as one "financed property." 

Property A: first mortgage. Counts as 1 financed property.

Property B: first mortgage and a HELOC. Counts as 1 financed property.

Property C: HELOC only, no other mortgage. Counts as 1 financed property.

Property D: No mortgage. Does not count.

In that example, there are 5 mortgages across 4 properties. But the grand total of "financed properties" is three.