HELOC came back less than expected - now what?

Question

Numbers

House appraised for $350k

Owe $150k

HELOC based off of credit (740), appraisal of house (350K), No credit card debt only a car payment ($350 a month) and house payment ($1600 a month)

$33k

I changed industries on my W2 from pharma sales to software sales so they can only take my base (im going to make between W2 and RE 170-220k this year, last year it was 140k)

Any other options other then a cash out refinance as was hoping to get a 100k HELOC for flipping

Joe Splitrock · Answer

It appears to me they are only letting you get the HELOC with around 50% LTV on the open balance plus HELOC. Generally speaking a HELOC should allow at least 65% LTV or even up to 80% LTV. This is the range I would expect your HELOC to be at:

65% = $227,500 - $150,000 = $77,500

80% = $280,000 - $150,000 = $130,000

Did you discuss LTV or target loan amount when you started the process with the bank? They should have given you some indication as to loan amount with assumed appraisal value. I would start by telling the bank that their loan value is lower than the competition and ask what they can do to improve it to $100K. Then I would call other banks, being transparent about the situation. Explain that the current bank is giving you 50% LTV and you need closer to 80% total. They should be able to give you general guidelines upfront.

My HELOC is directly with the bank and their lending policy controls the amount. My bank allowed up to 65% LTV or $200,000 whichever is lower. You appear to me as highly qualified and have good equity to tap, so it seems you could do better if you call around.

Jim Kalish · Answer

Try Kelly at Fifth Third Bank.  866-499-4784

HELOC 65% LTV10/30 3.875% - 5.50%

And I think TD Bank might be able to help as well.  800-815-6849

Also try PenFed.  800-970-7766

Both TD and PenFed limit the number of HELOCs and loans but will also do investment properties.

Dorian Weber · Answer

I would be using the HELOC for flip properties otherwise I would cash out refi the cash and buy homes

Thank you for taking the time

Dorian Weber · Answer

Thank you for taking the time

I owe 150-155k on the property

Home is in my name / Primary residence

I know many people aren't doing HELOCS

Andrew Postell · Answer

@Dorian Weber that sounds great to me to get a higher loan amount on that HELOC.  Is this for an investment property or a primary home?  Either way, I would certainly expect at least a $95k limit.  I would go to another lender ASAP.

Jim Kalish · Answer

Hi Dorian. Unless I missed it you didn't say what you still owe. Or if the house is in your name or an LLC. Let's assume your name and it's your primary.  To get 100k you would have to owe 145 or less assuming 70%LTV. As for debt to income it looks like 16% to a normal person. But Freddie and Fannie are anything but normal. But even with all the things they add on your DTI based on 140 looks fine. If all they offered was 33 would seem to be saying you still owe about 212. If you owe 145 or less I'd press them for an explanation.  A cash out Refi is definitely another way to go but I doubt the numbers will be much different. Maybe 65. If you are looking for another lender try Mr Cooper or Loan Depot. They do both primary and investment property.