Investor · Fort Myers, FL · Member since 2015 · 293 posts · 278 votes
Hello looking for some advice on a line of credit Wells Fargo called to offer me. I own a vacation property in Florida. The value of the property is approximately 200k. I owe 91K on it. The bank is offering me a 150K line of credit at 2.5% for the first year and then 4.5 adjustable from that point forward. I am planning on paying off the mortgage over the next 2 years. The bank will pay all closing costs. I would love to get rid of the mortgage as the home requires flood insurance and I understand in an extreme case flood is a risk, but the home was build in 1979 and it has never flooded, despite many hurricanes and tropical storms. I would rather self insure than throw away 1200$ a year with a 10K deductible a year. What's the downside of this deal?
Why is WF calling you? I'm always just a little suspicious of calls like this. Don't they have plenty of people applying for loans already?
Won't WF still require flood insurance even if you have a HELOC?
If the house is worth $200K and you currently have a $91K mtge, wouldn't the bank expect you to pay off the mtge since a 150K heloc + 90K mtge is more than the property's current value?
When the bank says they will pay all closing costs, are you sure they aren't saying that the costs will be rolled into the loan?
@Mike Terry, if the numbers work for you then it might be worth a shot. However, my experience with WF, Chase, and some others is that they are looking at some very rough qualification parameters and then throw some numbers are you. I have applied for refis and LOCs with these guys in the past and been turned down. I have rock solid financials but am a real estate investor with numerous properties so rarely meet the underwriter's guidelines despite the loan originator's rosy promises. Personally, I don't even waste my time any more. Usually the guy/gal on the phone has no clue what the actual qualifications are. They must get paid based on how many people they can get to the next step because they are very light on details and knowledge and heavy on the "let's just set up a time for you to talk to so and so". Good luck.